In cryptocurrency, OTC (Over-the-Counter) trading involves large deals between buyers and sellers done directly, rather than using an exchange’s public order book. Institutional investors, wealthy individuals, and companies typically conduct OTC trades when trading large quantities of crypto without incurring slippage and market impact.
OTC markets offer customized service that allows clients to trade directly with a counterparty and not on an exchange so that they may buy/sell virtually any amount of bitcoin at a price they agree upon while keeping price changes on the open market at a minimum. These platforms operate as intermediaries, facilitating secure and discreet transactions.
Advantages of OTC Trading
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Low price slippage: Huge trades on public exchanges can alter the market price. OTC trades are conducted off-exchange, avoiding such slippage.
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Personalized service: OTC platforms offer personalized services like market analysis, favorable pricing, and individualized solutions.
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Liquidity availability: OTC platforms have significant liquidity for large trades, providing instant execution.
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Fixed rate: The rate is agreed upon ahead of time so no changes in pricing occur.
Disadvantages of OTC trading
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Greater entry barriers: OTC trading is usually only an option for significant trades, frequently with minimum amounts in the tens or hundreds of thousands of dollars.
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Counterparty risk: Trust in the OTC platform or counterparty is important to avoid Ponzi and other types of frauds.
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Regulatory issues: Depending on the jurisdiction, OTC transactions may face legal or compliance challenges.
Crypto Exchanges Supporting OTC Trading
- OKX (OKX is user-focused first and foremost. They relied on maximum convenience and speed of the exchange, and OKX does this very well. In addition, OKX has its own and very convenient decentralized wallet to store tokens securely.).
How to start OTC trading on exchanges
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Register: Register on an exchange which provides OTC services and complete KYC/AML verification.
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Contact the OTC platform: Get in touch with the exchange’s OTC platform to talk about what you’re looking for in terms of trading, and for a price quote. Agree on the following terms, such as price, quantity, and payment terms.
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Deposit: Fund your account with the necessary cryptocurrency or fiat money.
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Execute the trade: the OTC platform arranges the trade, and ensures a secure and timely settlement.
Cryptocurrency OTC (Over-the-counter) trading of cryptocurrency is an essential service for high-volume traders that need privacy, low slippage and personal service. In spite of the liquidity and security benefits that come with OTC trading, it is crucial for traders to select reliable platforms and be aware of the risks that come with it. OTC platforms provide the bridge for institutions and other wealthy individuals to find a streamlined approach to the highly volatile crypto market.
