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Over-the-Counter Trading

The Future of OTC Trading

2020-01-08
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Many people who are just beginning their activities in the cryptocurrency market have a need to buy a certain amount of virtual currency. Thus, there are two options to make this type of transaction - traditional cryptocurrency exchanges and the over-the-counter sector. Both markets are good, but depending on the type of operation you need to make the right choice for you. When it comes to small amounts of currency, the exchange is the best option, but if you reach for a larger deal you should absolutely consider OTC trading. 

Over-the-counter trading (OTC) is a type of transaction that takes place between two parties directly, without intermediaries or exchange participation. Over-the-counter transactions are a decentralized market without a physical center. Examples of over-the-counter brokers are Octagon Strategy or Genesis Trading. Within OTC trading there is no transparent market price regulation and it is not known to the masses of people. 

The market of the OTC is quite large. Thus, according to one of the data, its volume varies from 250 to 30 billion dollars a day, while the cryptocurrency exchanges - about 15 billion dollars a day. Many people claim that the capacity of the OTC sector is even greater, as it is quite difficult to estimate. Very often transactions are done through various social networks and it is difficult to track them. 

The advantages of OTC trading are the absence of any limit - which is present in all cryptocurrency exchanges -  along with high liquidity, anonymity, and price fixation.

The main buyers on the OTC market are hedge funds, and the main sellers are miners. Continents, where the majority of transactions take place, are North America and Asia. There is an opinion that OTC deals are mostly suitable for large institutional investors. However, it is a good option for buyers and sellers of virtual currency, who plan to make large transactions and do not want to be limited by multiple barriers of traditional exchanges. 

For example, one of the banks that offer the OTC cryptotrading option is Migom Bank. The legal structure of the bank includes different types of financial licenses obtained in different countries. This allows the bank to work internationally and provide various financial services for entrepreneurs from any part of the world. In addition to that, there is even an opportunity to buy BTC via OTC.

OTC trading is becoming more and more popular. For example, well-known cryptoexchanges, such as Binance and Coinbase, have also launched the process of OTC trading, opening up platforms for it. 

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