Who's in the Market

9.1 Who's on the other side?

Every time Mint buys, someone else sells. Every time Mint sells, someone else buys. Mint had never really thought about who those people were.

"Is it just other people like me?" Mint asked.

"Some of them," said Hash. "But a lot of the time, you're trading against a professional firm, a bot, or someone holding more bitcoin than you'll ever see. Knowing who's in the market helps you understand why prices move the way they do."

This chapter introduces the main participants. Each one has different goals, tools, and timeframes.

9.2 Retail traders and investors

Retail means individual people trading their own money, like Mint and Node. Retail participants range from long-term holders who buy a little every month, to active day traders, to people who arrived last week because a friend made money on a memecoin.

Retail participation tends to rise sharply during bull markets, when prices are climbing and crypto is in the news, and fade during bear markets. Retail traders often have less information, less capital, and slower tools than professionals. Their biggest advantages are flexibility and time: no one forces them to trade, and they can wait as long as they like.

9.3 Whales

A whale is any holder with a very large position, large enough that their trades can move the market. There's no official threshold. On a smaller token, a whale might hold a few hundred thousand dollars. On Bitcoin, it means far more.

Because blockchains are transparent, people watch whale wallets closely. When a known whale moves a large amount to an exchange, traders sometimes read it as a sign they might sell. Be careful with this. Large transfers have many explanations, and whales know they're being watched.

Ownership of many crypto assets is highly concentrated, especially newer tokens, where early investors and the team often hold a big share. That concentration is a risk worth checking before you buy, as we'll see in Chapter 10.

9.4 Market makers

When Mint places a market order to buy, there's almost always a sell order waiting. Usually it was placed by a market maker.

Market makers are professional firms that continuously post both buy and sell orders, profiting from the small difference between them, the spread. Their presence keeps markets liquid, meaning you can trade quickly without moving the price much.

Think of a currency exchange counter at an airport. It's always willing to buy and sell, at slightly different prices. That gap is how it earns a living, and you get the convenience of trading instantly.

New tokens often sign agreements with market makers to provide liquidity when they launch. These arrangements aren't always disclosed, and they've sometimes been misused to create the appearance of activity. Not all volume is real demand.

9.5 Arbitrageurs and bots

We met arbitrageurs in Chapter 6. They profit from price differences between venues, buying where a token is cheap and selling where it's expensive. In doing so, they keep prices consistent across the market.

Much of this activity is automated. A large share of crypto trading volume is driven by bots: arbitrage bots, market-making bots, trend-following bots, and bots that watch blockchains for opportunities. On-chain, some bots specialise in reordering or inserting transactions around other people's trades to capture value, a practice called MEV (maximal extractable value), which we'll explain in Module 3.

"So I'm racing robots?" Mint asked.

"On short timeframes, yes, and you'll lose," said Hash. "On longer timeframes, the robots matter much less. Pick a game you can actually win."

9.6 Miners and validators

Miners (on proof of work networks) and validators (on proof of stake networks) secure blockchains and receive newly issued coins as rewards. Many of them regularly sell part of those rewards to pay for electricity, hardware, and operations. This creates a steady source of selling pressure that the market has to absorb.

That's one reason the Bitcoin halving gets so much attention. When the mining reward halves, the amount of new bitcoin miners might sell halves too.

9.7 Projects, foundations, and early investors

Most tokens are created by a team, often backed by venture capital firms that invested early, sometimes at much lower prices than the public pays. Teams and investors usually receive tokens that unlock gradually over months or years, according to a schedule.

When a large batch of tokens unlocks, holders who bought at a fraction of the current price may sell. These token unlocks are known events, published in advance, and they can weigh on prices. Checking the unlock schedule is a basic step in evaluating a token, covered in the Fundamental Analysis module.

9.8 Institutions

Institutions include hedge funds, asset managers, banks, corporations, and other organisations investing large sums. Their role in crypto has grown significantly.

A major milestone came in January 2024, when US regulators approved spot Bitcoin exchange-traded funds (ETFs), followed by spot Ether ETFs later that year. ETFs let people buy exposure to bitcoin through a regular brokerage account, and the funds hold the actual bitcoin on investors' behalf. Daily flows into and out of these funds are now closely watched as a signal of institutional demand.

Some public companies also hold bitcoin on their balance sheets as a treasury asset, and a few governments hold bitcoin too, often from seized assets.

Institutions tend to bring larger capital, longer time horizons, and more connection to traditional finance. That last part cuts both ways: crypto is now more affected by interest rates and stock market sentiment than it used to be.

9.9 Exchanges

Exchanges aren't neutral spectators. They decide which tokens to list, set margin and leverage rules, run their own products, and in some cases have trading arms. A listing on a major exchange can send a token's price sharply higher, and a delisting can do the opposite. Their rules on leverage and liquidations also shape how violent market moves become.

9.10 Putting it together

Participant	What they want	How they affect prices
Retail	Growth, excitement, long-term wealth	Drive momentum in bull markets, panic in crashes
Whales	Varies widely	Large trades can move prices, especially in smaller tokens
Market makers	Earn the spread	Provide liquidity and tighter prices
Arbitrageurs and bots	Profit from small inefficiencies	Keep prices consistent across venues
Miners and validators	Cover costs and earn rewards	Steady selling of newly issued coins
Teams and early investors	Return on early investment	Selling pressure around token unlocks
Institutions	Diversified, long-term returns	Large flows, closer links to traditional markets
Exchanges	Trading volume and fees	Listings, leverage rules, and liquidation mechanics

"So when I buy a new token on launch day," said Node slowly, "the people selling to me might be early investors who paid a fraction of the price, and a market maker hired by the team."

"Often, yes," said Hash. "That doesn't mean you shouldn't buy. It means you should ask why they're selling and why you're buying."

9.11 Try it yourself

Search for the daily flow data for US spot Bitcoin ETFs, which several data sites publish. Look at the last two weeks and note the largest inflow and outflow days. Then compare those days with Bitcoin's price moves.

For a newer token you're curious about, find its token unlock schedule on a token unlock tracker. When is the next unlock, and how large is it compared to the tokens already circulating?

Key takeaways from this chapter

1. Crypto markets include retail traders, whales, market makers, bots, miners and validators, project teams, early investors, institutions, and exchanges.
2. Market makers provide liquidity by quoting both buy and sell prices, earning the spread.
3. Bots and arbitrageurs dominate short-term trading and keep prices consistent across venues.
4. Miners, validators, and early investors are regular sources of selling pressure, especially around token unlocks.
5. Spot Bitcoin and Ether ETFs, approved in the US in 2024, opened crypto to traditional investors and made fund flows an important signal.
6. Knowing who's on the other side of your trade helps you understand price moves and choose a timeframe where you have a fair chance.