The president’s son will discuss his mining venture American Bitcoin alongside Asher Genoot, Chief Executive Officer of Hut 8.

The right market maker can be a launchpad for a cryptocurrency project, opening the door to major exchanges and providing valuable liquidity to ensure a token is tradeable — but when the wrong incentives are baked into the deal, that market maker can become a wrecking ball.One of the most popular and misunderstood offerings in the market-making world is the “loan option model.” This is when a project lends tokens to a market maker, who then uses them to create liquidity, improve price stability, and help secure listings at a cryptocurrency exchange. In reality, it has been a death sentence for many young projects.But behind the scenes, a number of market makers is using the controversial token loan structure to enrich themselves at the expense of the very projects they’re meant to support. These deals, often framed as low-risk and high-reward, can crater token prices and leave fledgling crypto teams scrambling to recover.“How it works is that market makers essentially loan tokens from a project at a certain price. In exchange for those tokens, they essentially promise to get them on big exchanges,” Ariel Givner, founder of Givner Law, told Cointelegraph. “If they don’t, then within a year, they repay them back at a higher price.”What often happens is that market makers dump the loaned tokens. The initial sell-off tanks the price. Once the price has cratered, they buy the tokens back at a discount while keeping the profit.Source: Ariel Givner“I haven’t seen any token really benefit from these market makers,” Givner said. “I’m sure there are ethical ones, but the bigger ones I’ve seen just destroy charts.”The market maker playbookFirms like DWF Labs and Wintermute are some of the best-known market makers in the industry. Past governance proposals and contracts reviewed by Cointelegraph suggest that both firms proposed loan option models as part of their services — though Wintermute’s proposals call them “liquidity provision” services.DWF Labs told Cointelegraph that it doesn’t rely on selling loaned assets to fund positions, as its balance sheet sufficiently supports its operations across exchanges without relying on liquidation risk. “Selling loaned tokens upfront can damage a project’s liquidity — especially for small- to mid-cap tokens — and we’re not in the business of weakening ecosystems we invest in,” Andrei Grachev, managing partner of DWF Labs, said in a written response to Cointelegraph’s inquiry.Related: Who’s really getting rich from the crypto bull run?While DWF Labs emphasizes its commitment to ecosystem growth, some onchain analysts and industry observers have raised concerns about its trading practices.Wintermute did not respond to Cointelegraph’s request for comment. But in a February X post, Wintermute CEO Evgeny Gaevoy published a series of posts to share some of the company’s operations with the community. He bluntly stated that Wintermute is not a charity but in the “business of making money by trading.” Source: Evgeny GaevoyWhat happens after the market maker gets the tokens?Jelle Buth, co-founder of market maker Enflux, told Cointelegraph that the loan option model is not unique to the well-known market makers like DWF and Wintermute and that there are other parties offering such “predatory deals.”“I call it information arbitrage, where the market maker very clearly understands the pros and cons of the deals but is able to put it such that it’s a benefit. What they say is, ‘It’s a free market maker; you don’t have to put up the capital as a project; we provide the capital; we provide the market-making services,’” Buth said.On the other end, many projects don’t fully understand the downsides of loan option deals and often learn the hard way that they weren’t built in their favor. Buth advises projects to measure whether loaning out their tokens would result in quality liquidity, which is measured by orders on the book and clearly outlined in the key performance indicators (KPIs) before committing to such deals. In many loan option deals, KPIs are often missing or vague when mentioned.Cointelegraph reviewed the token performance of several projects that signed loan option deals with market makers, including some that worked with multiple firms at once. The outcome was the same in those examples: The projects were left worse off than when they started.Six projects that worked with market makers under the loan option agreement tanked in price. Source: CoinGecko“We’ve worked with projects that were screwed over after the loan model,” Kristiyan Slavev, co-founder of Web3 accelerator Delta3, told Cointelegraph.“It’s exactly the same pattern. They give tokens, then they’re dumped. That’s pretty much what happens,” he said.Not all market-maker deals end in disasterThe loan option model isn’t inherently harmful and can even benefit larger projects, but poor structuring can quickly turn it predatory, according to Buth.A listings adviser who spoke to Cointelegraph on the condition of anonymity echoed the point, emphasizing that outcomes depend on how well a project manages its liquidity relationships. “I’ve seen a project with up to 11 market makers — about half using the loan model and the rest smaller firms,” they said. “The token didn’t dump because the team knew how to manage price and balance the risk across multiple partners.”The adviser compared the model to borrowing from a bank: “Different banks offer different rates. No one runs a money-losing business unless they expect a return,” they said, adding that in crypto, the balance of power often favors those with more information. “It’s survival of the fittest.”But some say the problem runs deeper. In a recent X post, Arthur Cheong, founder of DeFiance Capital, accused centralized exchanges of feigning ignorance of artificial pricing fueled by token projects and market makers working in lockstep. “Confidence in the altcoin market is eroding,” he wrote. “Absolutely bizarre that CEXs are turning an absolute blind eye to this.”Still, the listings adviser maintained that not all exchanges are complicit: “The different tier exchanges are also taking really extreme actions against any predatory market makers, as well as projects that might look like they rugged. What exchanges do is they actually immediately lock up that account while they do their own investigation.”“While there is a close working relationship, there is no influence between the market maker and the exchange of what gets listed. Every exchange would have their own due diligence processes. And to be frank, depending on the tier of the exchange, there is no way that there would be such an arrangement.”Related: Crypto’s debanking problem persists despite new regulationsRethinking market maker incentivesSome argue for a shift toward the “retainer model,” where a project pays a flat monthly fee to a market maker in exchange for clearly defined services rather than giving away tokens upfront. It’s less risky, though more expensive in the short term.“The retainer model is much better because that way, market makers have incentives to work with the projects long term. In a loan model, you get, like, a one-year contract; they give you the tokens, you dump the tokens, and then one year after that, you return the tokens. Completely worthless,” Slavev said.While the loan option model appears “predatory,” as Buth put it, Givner pointed out that in all these agreements, both parties involved agree to a secure contract.“I don’t see a way that, at this current time, this is illegal,” Givner said. “If somebody wanted to look at manipulation, that’s one thing, but we’re not dealing with securities. So, that gray area is still there in crypto — [to] some extent the Wild West.”The industry is becoming more aware of the risks tied to loan option models, especially as sudden token crashes increasingly raise red flags. In a now-deleted X post, onchain account Onchain Bureau claimed that a recent 90% drop in Mantra’s OM token was due to an expiring loan option deal with FalconX. Mantra denied the claim, clarifying that FalconX is a trading partner, not its market maker.Edited LinkedIn copy of Onchain Bureau’s LinkedIn post. Source: Nahuel AngeloneBut the episode highlights a growing trend: The loan option model has become a convenient scapegoat for token collapses — often with good reason. In a space where deal terms are hidden behind NDAs and roles like “market maker” or “trading partner” are fluid at best, it’s no surprise the public assumes the worst.“We’re speaking up because we make money off the retainer model, but also, this [loan option model] is just killing projects too much,” Buth said.Until transparency and accountability improve, the loan option model will remain one of crypto’s most misunderstood and abused deals.Magazine: What do crypto market makers actually do? Liquidity or manipulation

The right market maker can be a launchpad for a cryptocurrency project, opening the door to major exchanges and providing valuable liquidity to ensure a token is tradeable — but when the wrong incentives are baked into the deal, that market maker can become a wrecking ball.One of the most popular and misunderstood offerings in the market-making world is the “loan option model.” This is when a project lends tokens to a market maker, who then uses them to create liquidity, improve price stability, and help secure listings at a cryptocurrency exchange. In reality, it has been a death sentence for many young projects.But behind the scenes, a number of market makers is using the controversial token loan structure to enrich themselves at the expense of the very projects they’re meant to support. These deals, often framed as low-risk and high-reward, can crater token prices and leave fledgling crypto teams scrambling to recover.“How it works is that market makers essentially loan tokens from a project at a certain price. In exchange for those tokens, they essentially promise to get them on big exchanges,” Ariel Givner, founder of Givner Law, told Cointelegraph. “If they don’t, then within a year, they repay them back at a higher price.”What often happens is that market makers dump the loaned tokens. The initial sell-off tanks the price. Once the price has cratered, they buy the tokens back at a discount while keeping the profit.Source: Ariel Givner“I haven’t seen any token really benefit from these market makers,” Givner said. “I’m sure there are ethical ones, but the bigger ones I’ve seen just destroy charts.”The market maker playbookFirms like DWF Labs and Wintermute are some of the best-known market makers in the industry. Past governance proposals and contracts reviewed by Cointelegraph suggest that both firms proposed loan option models as part of their services — though Wintermute’s proposals call them “liquidity provision” services.DWF Labs told Cointelegraph that it doesn’t rely on selling loaned assets to fund positions, as its balance sheet sufficiently supports its operations across exchanges without relying on liquidation risk. “Selling loaned tokens upfront can damage a project’s liquidity — especially for small- to mid-cap tokens — and we’re not in the business of weakening ecosystems we invest in,” Andrei Grachev, managing partner of DWF Labs, said in a written response to Cointelegraph’s inquiry.Related: Who’s really getting rich from the crypto bull run?While DWF Labs emphasizes its commitment to ecosystem growth, some onchain analysts and industry observers have raised concerns about its trading practices.Wintermute did not respond to Cointelegraph’s request for comment. But in a February X post, Wintermute CEO Evgeny Gaevoy published a series of posts to share some of the company’s operations with the community. He bluntly stated that Wintermute is not a charity but in the “business of making money by trading.” Source: Evgeny GaevoyWhat happens after the market maker gets the tokens?Jelle Buth, co-founder of market maker Enflux, told Cointelegraph that the loan option model is not unique to the well-known market makers like DWF and Wintermute and that there are other parties offering such “predatory deals.”“I call it information arbitrage, where the market maker very clearly understands the pros and cons of the deals but is able to put it such that it’s a benefit. What they say is, ‘It’s a free market maker; you don’t have to put up the capital as a project; we provide the capital; we provide the market-making services,’” Buth said.On the other end, many projects don’t fully understand the downsides of loan option deals and often learn the hard way that they weren’t built in their favor. Buth advises projects to measure whether loaning out their tokens would result in quality liquidity, which is measured by orders on the book and clearly outlined in the key performance indicators (KPIs) before committing to such deals. In many loan option deals, KPIs are often missing or vague when mentioned.Cointelegraph reviewed the token performance of several projects that signed loan option deals with market makers, including some that worked with multiple firms at once. The outcome was the same in those examples: The projects were left worse off than when they started.Six projects that worked with market makers under the loan option agreement tanked in price. Source: CoinGecko“We’ve worked with projects that were screwed over after the loan model,” Kristiyan Slavev, co-founder of Web3 accelerator Delta3, told Cointelegraph.“It’s exactly the same pattern. They give tokens, then they’re dumped. That’s pretty much what happens,” he said.Not all market-maker deals end in disasterThe loan option model isn’t inherently harmful and can even benefit larger projects, but poor structuring can quickly turn it predatory, according to Buth.A listings adviser who spoke to Cointelegraph on the condition of anonymity echoed the point, emphasizing that outcomes depend on how well a project manages its liquidity relationships. “I’ve seen a project with up to 11 market makers — about half using the loan model and the rest smaller firms,” they said. “The token didn’t dump because the team knew how to manage price and balance the risk across multiple partners.”The adviser compared the model to borrowing from a bank: “Different banks offer different rates. No one runs a money-losing business unless they expect a return,” they said, adding that in crypto, the balance of power often favors those with more information. “It’s survival of the fittest.”But some say the problem runs deeper. In a recent X post, Arthur Cheong, founder of DeFiance Capital, accused centralized exchanges of feigning ignorance of artificial pricing fueled by token projects and market makers working in lockstep. “Confidence in the altcoin market is eroding,” he wrote. “Absolutely bizarre that CEXs are turning an absolute blind eye to this.”Still, the listings adviser maintained that not all exchanges are complicit: “The different tier exchanges are also taking really extreme actions against any predatory market makers, as well as projects that might look like they rugged. What exchanges do is they actually immediately lock up that account while they do their own investigation.”“While there is a close working relationship, there is no influence between the market maker and the exchange of what gets listed. Every exchange would have their own due diligence processes. And to be frank, depending on the tier of the exchange, there is no way that there would be such an arrangement.”Related: Crypto’s debanking problem persists despite new regulationsRethinking market maker incentivesSome argue for a shift toward the “retainer model,” where a project pays a flat monthly fee to a market maker in exchange for clearly defined services rather than giving away tokens upfront. It’s less risky, though more expensive in the short term.“The retainer model is much better because that way, market makers have incentives to work with the projects long term. In a loan model, you get, like, a one-year contract; they give you the tokens, you dump the tokens, and then one year after that, you return the tokens. Completely worthless,” Slavev said.While the loan option model appears “predatory,” as Buth put it, Givner pointed out that in all these agreements, both parties involved agree to a secure contract.“I don’t see a way that, at this current time, this is illegal,” Givner said. “If somebody wanted to look at manipulation, that’s one thing, but we’re not dealing with securities. So, that gray area is still there in crypto — [to] some extent the Wild West.”The industry is becoming more aware of the risks tied to loan option models, especially as sudden token crashes increasingly raise red flags. In a now-deleted X post, onchain account Onchain Bureau claimed that a recent 90% drop in Mantra’s OM token was due to an expiring loan option deal with FalconX. Mantra denied the claim, clarifying that FalconX is a trading partner, not its market maker.Edited LinkedIn copy of Onchain Bureau’s LinkedIn post. Source: Nahuel AngeloneBut the episode highlights a growing trend: The loan option model has become a convenient scapegoat for token collapses — often with good reason. In a space where deal terms are hidden behind NDAs and roles like “market maker” or “trading partner” are fluid at best, it’s no surprise the public assumes the worst.“We’re speaking up because we make money off the retainer model, but also, this [loan option model] is just killing projects too much,” Buth said.Until transparency and accountability improve, the loan option model will remain one of crypto’s most misunderstood and abused deals.Magazine: What do crypto market makers actually do? Liquidity or manipulation

The other major cryptocurrency is becoming the global settlement layer for on-chain assets, says Advantage Blockchain’s Alec Beckman.

Bitcoin (BTC) centered on $84,000 at the April 16 Wall Street open amid hopes that a weak US dollar would fuel a bull market comeback.BTC/USD 1-hour chart. Source: Cointelegraph/TradingViewBitcoin analysis calls for 2023 rally repeatData from Cointelegraph Markets Pro and TradingView showed BTC/USD consolidating after a swift comedown from local highs the day prior.That volatility had accompanied ongoing developments in the US-China trade war, with crypto and risk assets staying sensitive to headlines and statements from parties such as US President Donald Trump.The S&P 500 and Nasdaq Composite Index traded down 1.4% and 2.2%, respectively, at the time of writing.Gold remained the standout winner, having set new all-time highs above $3,300 per ounce on the day.“Unlike gold, BTC has not caught a safe-haven bid,” trading firm QCP Capital summarized in its latest bulletin to Telegram channel subscribers. “The ‘alternative store of value’ narrative isn't gaining traction in the current macro regime. Positioning remains defensive. Participants are still focused on hedging their downside until greater clarity emerges.”Gold/USD price 1-hr candle chart. Source: Cointelegraph/TradingViewLooking for potential tailwinds, market participants focused on the US dollar’s inability to reclaim prior support after sliding precipitously as the trade war took hold.The US dollar index (DXY) hovered near multiyear lows after rejecting at the psychologically significant 100 mark.US Dollar Index price 1-hr candle chart. Source: Cointelegraph/TradingView“DXY is dropping at its fastest pace since 2023,” popular trader BitBull told followers in a post on X.BitBull drew comparisons to BTC price performance from the time, with early 2023 seeing Bitcoin and altcoins emerge from the pit of the 2022 bear market.“Back then, $BTC had already bottomed (Q4 2022) and went on to rally 200%+ within a year,” he continued.“I guess it’s time for btc to repeat the 2023-24 rally.”Source: X/@AkaBull_Andre Dragosch, European head of research at asset management firm Bitwise, meanwhile flagged Goldman Sachs research seeing further DXY downside to come.“NOTE: US Dollar is still significantly overvalued according to GS,” he commented alongside a Goldman chart of dollar strength versus US growth performance. “Lots of room for USD depreciation = upside potential for BTC to re-rate.”Source: X/@Andre_DragoschBTC price gives cautious bullish hintsBitcoin traders eyed various positive chart signals on the day, with these including a potential bottom formation on the 4-hour chart.Related: Can 3-month Bitcoin RSI highs counter bearish BTC price 'seasonality?'“Forming an Inverse Head & Shoulders Pattern on the 4H timeframe, if we manage to hold a Higher Low in the coming days,” popular trader Luca suggested.Source: X/@MirageMogulCrypto trader, analyst and entrepreneur Michaël van de Poppe hoped for a fresh retest of resistance, for him one of two key areas of interest.“Bitcoin is still nicely consolidating between the two levels,” he concluded. “The test at $87K did happen, and I think that we'll see a big breakout once we'll retest it again. What's next? Likely a run to ATH at the end of this quarter.”Source: X/@CryptoMichNLThis article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.