What Is Crypto OTC Trading?

Also known as over crypto over-the-counter (OTC) trading, this trading method has been increasing in popularity in recent years. This is because many intermediaries and brokers are looking to capitalize on the current penetration by institutions into the crypto markets. 

As with all financial OTC markets, crypto OTC trading works in the same way. A bilateral-party agreement is established in the role of a buyer or a seller without the oversight of exchange an authority

Exchanges such as NASDAQ or the New York Stock Exchange act as an intermediary and mediator between the buyer and the seller, where the traders post the ask and bid price in a public setting and attempt to reach an agreement 

In contrast, OTC trading refers to the trade between two parties, with one generally taking the role of the ‘desk’ or a dealer to trade assets like bonds, stocks, currencies, and derivatives. It also occurs through a dealer-broker network, ensuring higher privacy for traders while dealing with higher volume transactions than exchanges. 

Exchange Vs OTC Trading

If you are choosing between the exchange route or the OTC, here’s a quick look at the advantages and disadvantages of both. 

Pros of Crypto OTC Trading 

• More appropriate for large-volume traders who have a high net worth
• Higher anonymity and privacy 
• No exchange risk 

Cons of Crypto OTC Trading 

• Might have increased fees as compared to exchanges
• Minimum order amounts

Pros of Exchange Trading 

• It can be potentially automated
• More appropriate for small-scale investors
• More lucrative for those who want to trade price trends actively. 

Cons of Exchange Trading 

• The threat of theft and hacking 
• Slippage raises the cost 
• Lower transaction rate because an order may not fill. 

Platforms Where Crypto Trading Occurs

There are numerous platforms where crypto OTC trading occurs. These include:

• Trading Firms – If you want tailored treatment, you can utilize platforms to access traders who specialize in large transactions. 
• Chat Rooms – Even though the first huge OTC bitcoin trade occurred on the #bitcoin-otc chatroom, this platform is now less common but still exists to date. 
• Dark Pools – Dark pools are non-public, private exchanges not available to the larger public market. Such markets have no order book and enable big investors to trade with one another separately. 

How Much Money to Start Crypto OTC Trading?

Many new entrants in the crypto market wonder how much money they will need to start crypto OTC trading. 

As per CoinTelegraph, some desks allow transactions bigger than 20 BTC (approximately $220,000 in September 2020) and others who want their investors to trade the equal of a minimum $250,000. However, you usually only require 10 BTC ($110,000 in August 2020) for certain smaller desks to initiate trading. 

A Holistic Crypto Wealth Experience

 

Many exchanges have a bottleneck effect on their platform when there is a surge of buyers/sellers looking to get in and out of the market. As a result, wallets become frozen, technical issues with accounts logins, orders being left unfilled, and a lack of quality customer service for clients looking to take advantage of these high times. 

At ChainMyne, we are committed to ensuring your experience is a smooth experience. We promise you the deepest liquidity and aim to achieve customer satisfaction with every transaction through our hands-on approach, white glove customer care service. 

We pride ourselves on our team of Affluent Account directors, whom you will have access to 24 hours a day, seven days a week to ensure our clients are well-taken care of regardless of the market conditions. 

For more information on crypto trading, head over to our website!