Renowned market maker Wintermute founder and CEO wishfulcynic.eth recently posted on Twitter about Wintermute's general business model and explained why Wintermute and Binance's entries are often seen by the community as short-term price tops.
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ToggleWintermute states that its interests are aligned with the market
He stated that Wintermute's core business is still trading cryptocurrencies, and they added a venture capital department starting in 2020. They have never been net short on cryptocurrencies. Their crypto asset allocation is around 20% to 30% of the company's net assets (including venture investments and treasury positions). They are not only interested in finding opportunities to profit from the market, but also hope that this field can continue to exist, evolve and grow.
Therefore, it is unreasonable to say that they hope the market will decline. Although they made some money from the brief volatility caused by the Luna collapse, 3AC bankruptcy, and FTX bankruptcy, it is not enough to offset the losses from their medium-term long positions and the negative impact of the prolonged market downturn.
Wintermute's business covers CeFi, DeFi, and CTO
Wintermute's business covers CeFi, DeFi and OTC. When they collaborate with specific token projects, they hope to operate through their three core businesses (DeFi, CeFi, OTC) simultaneously. Basically, these activities are "delta neutral". That is, if they sell on Binance, they will try to buy back at the most favorable price point across the entire market. OTC trades sometimes take longer to unwind, especially for long-tail assets, but the ultimate goal is to return to a "delta neutral" position.
CeFi
This part of the business is largely related to liquidity provision, with Wintermute posting bids and offers on hundreds of trading platforms. This is a good business when the market sentiment is good and retail traders are willing to cross the spread. When the market is sluggish and the only ones crossing the spread are other prop trading firms, it's not as profitable (if they're too slow or too dumb, they'll get rekt). They also have a taker strategy to arbitrage price differences across different trading venues.
DeFi
They provide liquidity on RFQ (request for quote) protocols like 1inch, bebop and Jupiter, and also do arbitrage on AMMs (like Uniswap). They are solvers for Cowswap, and also do liquidations on Aave and Morpho. As for trading on CLOB (central limit order book) platforms like Hyperliquid, their approach is actually quite similar to their CeFi business.
Wintermute rarely does what is called discretionary investing. Although they occasionally have some positions, this is not their forte. The vast majority of their discretionary trades are long, such as buying the dips or buying discounted locked tokens. While they do go short, it's rare. The reason is that the market often irrationally continues to rise, so the risk of shorting is extremely high. And when they do hold positions, the size is not large (limited by the 20-30% net asset exposure mentioned earlier).
Why is Binance the endpoint for tokens? Wintermute tells you
wishfulcynic.eth further explains why prices tend to drop (and why it's always when Wintermute and Binance enter):
a. Macroeconomic factors
BTC price, and the S&P and Nasdaq futures (ES/NQ) on the Chicago Mercantile Exchange (CME). The two recent crashes were directly related to traditional finance events (DeepSeek and Tariffs). For example, a drop in NQ would drag down BTC, which in turn would pull down SOL, and finally FARTcoin. He wants to convey that the crypto market is in fact highly correlated with the macroeconomy, and the idea that Wintermute + Binance entering causes a drop is just a conspiracy theory.
b. Supply > Demand
The more liquid a token is, the easier it is to sell. Therefore, when a token is listed on Binance and market makers start buying and selling, anyone can more easily sell and move on to new targets. If you still don't understand this and blame your own stupid trades on exchanges and market makers, then wishfulcynic.eth wishes you "have fun stay poor".
c. Another detail is about the call options in the market making (MM) agreements
When the token price is above the strike price, it is reasonable for market makers to choose to sell. He believes that if the amount, strike price and contract term are made public, the market will be more fair. He also believes that the crypto industry should be more transparent. But they cannot disclose this information on their own, as it should be decided by the token team whether to make it public. The same goes for OTC trades, which should be disclosed by the protocol or token insiders, and we also need to reach a consensus in the entire industry to normalize this disclosure.
Wintermute denies manipulating market prices and clarifies that there is no need to hunt for stop losses
Finally, he also clarified that they do not hunt for stop losses. His view is that this behavior is too risky, and their current profit model is already very good, so they don't need to do this.
He also denied manipulating market prices, because
a) they don't know how to do it;
b) their core business is already exhausting, and they can't be bothered with stupid and illegal things. He really likes his current life in the US and UK, and doesn't want to go to Dubai because of criminal charges.
As for on-chain activities:
- Transfers: just reallocating inventory between different exchanges, where the inventory is insufficient.
- AMM showing Christmas tree-shaped K-lines: arbitrage between CeFi and AMM.
Risk Warning
Cryptocurrency investment is highly risky, its price may fluctuate violently, and you may lose all your principal. Please carefully evaluate the risks.
