Top market maker Citadel Securities is entering Bitcoin market-making, signaling both the maturation of the Bitcoin market and a critical step in traditional financial institutions competing for future asset pricing power. For retail investors, this may gradually diminish their influence in the market.
On February 25th, Bloomberg reported that Citadel Securities is seeking to become a liquidity provider for cryptocurrencies. According to insiders, the firm aims to join market maker lists on various exchanges, including those operated by Coinbase Global, Binance Holdings, and Crypto.com. Once approved, Citadel Securities plans to initially establish a market-making team outside the U.S.
This move not only marks a significant strategic shift for Citadel Securities but also suggests potential transformative changes for the crypto market.
Citadel: The King of Hedge Funds
Hedge fund Citadel and market-making-focused Citadel Securities were both founded by "algorithmic trading genius" Kenneth C. Griffin. In 1987, at just 19 years old, Ken Griffin began his trading career in a Harvard dormitory. By 1990, he had established his own investment group, Citadel (originally Wellington Financial Group), with $4.6 million.
As of the end of 2024, Citadel's assets under management (AUM) reached $66 billion. According to LCH Investments, Citadel ranks highest in net profits among top hedge funds since inception, totaling $83 billion by the end of 2024—surpassing D.E. Shaw, Millennium Management, and Bridgewater Associates.
Citadel Securities: The Largest Designated Market Maker on NYSE
Launched in 2002 as a market-making division under Citadel, Citadel Securities later spun off to operate independently. Today, it stands as one of the world's largest market makers, playing a pivotal role in U.S. capital markets. Its core business involves providing liquidity for stocks, options, fixed-income products, ETFs, and other traditional financial instruments through high-frequency trading and algorithms.
According to its website, Citadel Securities handles a daily nominal trading volume of $503 billion, accounting for roughly 35% of U.S. retail stock trades. It is the largest designated market maker on the New York Stock Exchange, holding a 65% market share.
Citadel Securities rose to prominence during the 2021 GameStop short squeeze. When retail investors rallied on social media to drive up prices of "meme stocks" like GameStop, short-selling institutions suffered heavy losses. As a key market maker, Citadel Securities processed vast volumes of these trades, showcasing its robust execution capabilities.
Notably, Citadel Securities CEO Peng Zhao is an 80s-born Chinese-American from Beijing. After graduating from Peking University’s Applied Mathematics Department in 1997, he pursued a Ph.D. in Statistics at UC Berkeley and briefly worked as a quantitative research intern at Lehman Brothers. Zhao joined Citadel Securities as a senior quantitative researcher, eventually rising to CEO in 2017. Under his leadership, the firm expanded globally, particularly in Asia and China. In 2023, Citadel Securities China secured QFII status, and in January 2025, it applied to establish a securities company in China.
Citadel Securities: From Skepticism to Crypto Market Entry
Citadel Securities' journey into crypto reflects a shift from skepticism to strategic involvement. Founder Kenneth C. Griffin initially compared Bitcoin to the tulip bubble but later called it "one of the greatest financial stories" and admitted regretting not buying crypto earlier. This evolution mirrors broader traditional finance adoption of digital assets.
Early on, Citadel Securities remained cautious due to crypto’s volatility and regulatory uncertainty. However, as institutional interest grew post-2021, the firm began exploring the space. Griffin’s 2022 remarks about crypto’s potential signaled Citadel’s impending entry. That January, Citadel Securities raised $1.15 billion from Sequoia Capital and Paradigm, a crypto-focused fund. Paradigm co-founder Matt Huang expressed excitement about Citadel applying its expertise to crypto.
In 2022, rumors linked Citadel to UST’s collapse, which the firm denied, stating it only conducted two minor test trades. By mid-2022, Citadel took concrete steps: preparing to market-make crypto ETFs and co-launching institutional exchange EDX Markets with partners like Fidelity and Virtu Financial. EDX secured funding in 2023 and 2024, backed by Pantera Capital and Sequoia.
Citadel also invested in digital asset brokerage Hidden Road Partners and acquired a 5.5% stake in crypto-friendly Silvergate Bank. In 2023, BlackRock selected Citadel as an authorized participant for its Bitcoin ETF (IBIT). By late 2024, Griffin openly regretted not investing in crypto earlier.
What Impact Will Citadel’s Entry Have on Crypto Market-Making?
Citadel’s move underscores crypto’s institutionalization, clearer regulations, and competitive pressures. Its presence could reshape Bitcoin trading by:
- Mainstream Adoption: Accelerating Bitcoin’s shift from niche asset to institutional portfolio staple, attracting hedge funds and pensions.
- Enhanced Liquidity: Boosting order depth, volume, and market stability via advanced market-making.
- Exchange Benefits: Improving trading efficiency on platforms like Coinbase and Binance, drawing more institutional capital.
- Competitive Shakeup: Pressuring smaller market makers and potentially spurring rivals like Jane Street to follow suit.
For retail investors, Citadel’s entry offers smoother trades but risks reduced influence as institutions dominate. While transparency may rise,散户 could face a shrinking voice in an increasingly professionalized market.
👉 Explore how Citadel Securities is revolutionizing crypto liquidity
FAQs
Q: Why is Citadel Securities entering crypto now?
A: Growing institutional demand, regulatory clarity, and profit opportunities have made crypto a strategic priority.
Q: How will this affect existing crypto market makers?
A: Smaller firms may struggle to compete with Citadel’s resources, leading to consolidation.
Q: Does Citadel’s involvement make crypto safer?
A: While liquidity improves, crypto remains volatile. Institutional participation adds credibility but doesn’t eliminate risk.
Q: What’s next for Citadel in crypto?
A: Expect expansion into derivatives, custody, and possibly launching proprietary crypto products.