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Crypto OTC Trading: How Does It Work?

Crypto OTC trading is a more customized type of transaction, indicated for buying and selling digital assets in larger volumes.
Crypto OTC Trading: How Does It Work?

Crypto OTC is a type of transaction suitable for buying or selling large amounts of cryptocurrencies. It's an easier, safer, more private and profitable way for the investor. OTC stands for over-the-counter and refers to trading parallel to order books. Among the advantages of OTC are reduced fees, access to a broad range of cryptocurrencies and improved pricing for large orders.

What is crypto OTC trading?

Over-the-counter trading has been around since the investment world began. That's how most stock trades were carried out before electronic trading books existed. Investors literally went to a brokerage counter to buy and sell manually.

Today, OTC is mostly used for large transactions which would not be advantageous if carried out through the order book due to limited liquidity, leading to high slippage costs.

As with block trades in the stock market, privacy is another reason to use an OTC desk. An institutional investor may opt to not use the orderbook so other market participants don't front-run the order.

How does it work?

This type of transaction is offered through OTC desks and crypto exchanges. Each has its own rules as well as a minimum trading value. The investor will need to register and request a quote. The intermediary will respond with the quoted value and, once accepted by the investor, the transaction is closed and will be settled on agreed terms. Settlement usually happens a few minutes after the trade and it is quite unusual to roll back a trade.

Who is crypto OTC trading service for?

  • Institutional investors

  • Bitcoin Whales

  • High Net Worth individuals

  • Crypto Funds

  • Hedges

  • Any investor who will trade over the minimum amount required by the OTC table.

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