Market maker

One mystery trader using a pseudonym made about $930,000 in the first few minutes before the cryptocurrency collapsed, Data Vault AI reported.

Hunter has been blaming the collapse on The Market Maker, a firm hired to handle trading on crypto markets.

Quote, There was an F-up that occurred in the first 30 seconds of launching the coin, in which The Market Maker, for some unknown goddamn reason, only put in $5,000 of liquidity.

End quote.

But according to a source familiar with the project, there were very few genuine buyers of Hunter's meme coin, other than a lot of bots and a few small gamblers, which is why initial liquidity was set low to stave off the scammers.

Grossman-Stiglitz speculates that there's only two types of traders, informed traders and uninformed traders.

First, there's no mechanism or facilitator between the two of them to actually effectuate a trade, quote unquote, "market makers." So you have informed traders and uninformed traders that are trading in a largely frictionless world in which the only differential is the bid-ask spread.

And under the Grossman-Stiglitz articulation, that means that the information that is sought by the active discretionary informed trader is valuable and can be used to earn excess returns as a corrector mechanism to the wildness of the crowds.

It turns out that there are both not just informed and uninformed traders.

That positions them as a particular type of informed trader, a facilitator, who really serves to fan the flames of the crowd.

And the failure that people have, I mentioned earlier there was a paper released earlier this year from Hannah Unterberg that looks at the aggregate active share of the traditional discretionary managers and concludes that it's become negative, right? And that's looking at the asset management space.

But that ignores the informed traders who are really the market makers who've chosen the facilitation route and use that to seek extraordinary profit, witness the profits we've seen at Citadel and Jane Street and other market-making firms.

They effectively have become the croupiers at the casino.