@loismarilyn
High-frequency traders (HFTs) can both add liquidity and amplify volatility in crypto markets. On one hand, HFTs narrow spreads and provide constant market-making activity, which stabilizes prices under normal conditions. On the other, their rapid-fire strategies often trigger sharp short-term moves when reacting to order book imbalances or news. During periods of stress, HFT algorithms may withdraw liquidity, exacerbating swings. Because crypto trades 24/7 with fragmented liquidity, HFT influence is more pronounced compared to traditional markets. Overall, HFTs increase efficiency but also amplify turbulence in high-volatility periods.
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