Market making bots: how a crypto market maker bot earns the spread, and how it loses
BotIndex editorial team · Updated 6 Nov 2026 · Editorial policy
A market making bot keeps a buy order just below and a sell order just above the current price, hoping both fill so it earns the gap (the spread), and sometimes a maker rebate. The risk is inventory: in a trend only one side fills, and the bot ends up holding a falling coin or sold out of a rising one.
What is a market making bot?
A market making bot is software that places a buy order slightly below the current price and a sell order slightly above it, at the same time, and keeps both refreshed. When someone sells into your bid and someone else buys from your ask, you have bought low and sold high by the width of the gap between them.
That gap is the bid/ask spread. Exchanges need someone to keep orders resting on the book so that other traders can buy and sell instantly. Market makers do that job, and the spread is their pay.
Because a market maker bot’s orders rest on the book, they are usually charged the maker fee rather than the higher taker fee. On some exchanges a maker can even earn a rebate. Kraken, for example, announced a maker fee of -0.02% (a rebate) on selected lower-liquidity spot pairs, but only at its top volume tiers of $10 million and $100 million in 30-day volume (Kraken). Retail accounts rarely reach those tiers.
How a retail market maker bot works
Most market making bots, including the ones on retail bot platforms, follow the same loop:
- Read the mid price. The bot takes the midpoint between the best bid and best ask.
- Quote both sides. It places a bid a set distance below the mid and an ask the same distance above. That distance is your spread setting.
- Wait and refresh. If the price moves and neither order fills, the bot cancels and re-quotes around the new mid, often every few seconds.
- Track inventory. Every fill changes how much of the coin you hold. Better bots shift their quotes to sell more when you hold too much and buy more when you hold too little.
- Repeat. Profit comes from many small round trips, not from guessing direction.
Worked example (made-up round numbers)
Example: a coin trades at 100.00 USDT. Your bot bids at 99.90 and asks at 100.10, a spread of 0.20%. Both orders fill for 10 coins.
- You bought 10 at 99.90 = 999.00 USDT
- You sold 10 at 100.10 = 1,001.00 USDT
- Gross profit: 2.00 USDT
Now add fees. If both orders pay a 0.10% maker fee (the spot rate listed in our data for exchanges such as Bybit and Gate), you pay about 1.00 USDT on the buy and 1.00 USDT on the sell. Net profit: roughly zero.
That is the core lesson of market making. Your spread has to be wider than your round-trip fees, but a wider spread fills less often, and other bots will undercut you. Check the numbers for your own exchange with our bot fee calculator.
The risks of market making bots
Inventory risk in trending markets
Market making works best when price wobbles around a level. In a trend, only one side keeps filling. In a falling market your bids keep getting hit, and you accumulate a coin that is losing value while your asks sit unfilled above the price. In a rising market you sell out early and miss the move. A few percent of trend can erase weeks of spread income.
Adverse selection
The traders most eager to hit your quotes are often the ones who know something you don’t yet: a large order coming, news, or a price move on another exchange. Your bid gets filled just before the price drops; your ask gets filled just before it jumps. This “being picked off” is the main reason simple market making bots lose to faster, better-informed participants.
Illiquid pairs
Wide spreads on small, illiquid coins look attractive, but they are wide for a reason. Fills are rare, price can gap through your orders, and you may be stuck holding a token you cannot sell near your entry. Small pairs are also where wash trading and fake volume are most common.
Technical and account risk
The bot needs a constant connection and an API key with trading rights. Outages, rate limits or a stuck order can leave inventory unhedged. Use trade-only keys without withdrawal rights, as covered in our API key safety guide.
Crypto market making software in our data
Most exchanges we track do not offer a dedicated market making bot. Their grid bots are the closest substitute. Two third-party platforms list one:
| Platform | Market making offer | Price in our data | Notes |
|---|---|---|---|
| Cryptohopper | Market making bot placing buy and sell orders around the spread | Requires the Hero plan; plans start from $24.16/mo billed annually | Spot only, 11 exchanges |
| HaasOnline | Market Making bot among its built-in bot types, plus custom HaasScript bots | From $11.99/mo after a 7-day trial | 19 exchanges; steeper learning curve |
HaasOnline also lists a WaveRunner bot aimed at “capturing spreads in choppy spot markets”, which works on a similar idea.
Open-source option: Hummingbot
Hummingbot is an open-source Python framework for running trading strategies on centralized and decentralized exchanges. Its code is released under the Apache 2.0 license and it is maintained by the Hummingbot Foundation, which calls it a framework “for crypto market makers”. The homepage listed 318 connectors when we checked.
Its legacy strategy templates include Pure Market Making on a single pair, Avellaneda Market Making based on the Avellaneda-Stoikov paper, and Cross-Exchange Market Making, which quotes on one exchange and hedges inventory on another (Hummingbot strategies). The software is free, but you install, configure and host it yourself, so it suits technical users.
Should you run a market making bot?
A market making bot is a fee and speed game. Before you start, check that your fee tier leaves room inside a realistic spread, pick a liquid pair that tends to move sideways, cap the inventory the bot can build, and decide in advance what price move makes you stop.
If you want a similar “buy below, sell above” approach with less tuning, read what a grid trading bot is. If your interest is price gaps between markets rather than the spread, see our guide to crypto arbitrage bots. For the bigger picture, read whether trading bots are profitable.
FAQ
Is a market maker bot profitable for retail traders?
It can be on some pairs and in some periods, but the edge is thin. The spread you earn has to cover trading fees on both sides plus losses when price trends against your inventory. Professional market makers often pay lower fees or get maker rebates that retail accounts do not.
What is the difference between a market making bot and a grid bot?
Both keep buy orders below and sell orders above the price. A grid bot spreads many orders across a wide range you set and waits. A market making bot quotes close to the current price and keeps moving its orders as the market moves, so it trades more often and is more sensitive to fees.
Is there free crypto market making software?
Hummingbot is an open-source framework under the Apache 2.0 license, maintained by the Hummingbot Foundation, with market making strategies built in. The software is free, but you run it yourself and pay normal exchange fees.
Is market making the same as market manipulation?
No. Quoting genuine buy and sell orders is legal and normal. Faking volume by trading with yourself (wash trading) or placing orders you intend to cancel to mislead others (spoofing) is manipulation, and some services sold as 'market making' for small tokens do exactly that.
Sources
- Kraken — Announcing maker rebates on select spot pairs ↗checked 6 Nov 2026
- Hummingbot — Homepage ↗checked 6 Nov 2026
- Hummingbot — Strategies V1 (legacy templates) ↗checked 6 Nov 2026
Not financial advice. Trading bots do not remove market risk.