Cryptography currency trading typically occurs through exchanges. The advent of Over-The-Counter (OTC) trading services, however, has started to redefine this narrative, specifically for trades involving large crypto volumes. OTC facilitates direct transactions between two parties rather than via a regulated exchange. This feature contributes to OTC growing acceptance amongst high-value traders as it offers expanded confidentiality and flexibility.
OTC crypto trading involves a direct transaction between two parties without intermediation by an exchange. These transactions are typically spearheaded by OTC brokerage firms who bridge the gap between buyers and sellers. Unlike traditional exchange trading, OTC provides a high degree of privacy, larger capacity, and less market disruption (Source: Investopedia), making it sought-after amongst large-scale traders.
High-volume trades often face issues in traditional exchanges due to limited order books and liquidity (Source: FX Empire). OTC services address these issues by directly connecting buyers and sellers, facilitating large trades without exposing orders to the broader market. This inhibits drastic price changes during the process of transacting large volumes.
The impact of OTC trading on the crypto market becomes evident when analyzing specific pivotal events. An example is the bear market of 2018, where Bitcoin prices fell over 50% within a few months. Despite the downturn in the public exchange world, Bitcoin volumes in the OTC market reportedly surged (Source: Bitcoinist). This industry case provides insight into OTC's powerful influence on large scale crypto transactions.
Biggest players include Circle, Jump Trading, and Galaxy Digital among others which have forged partnerships with the traditional financial sector to offer more potent OTC services. These parties actively influence the growth and dynamism of the crypto markets through their trading activities (Source: PwC).
