Over-The-Counter (OTC) trading in the cryptocurrency world is a direct deal between two parties, without any intermediary. This form of trading has gained popularity in the crypto sphere due to the high liquidity and personalized service it offers. It is a viable option for investors who want to trade large amounts of cryptocurrencies, as it allows them to avoid slippage. Slippage is the difference between the expected price of a trade and the price at which the trade is executed, which can be significant in standard crypto exchanges due to their volatility.
Crypto OTC trading desks work by acting as middlemen to match buyers and sellers who wish to trade. They provide a quote for the amount of cryptocurrency a buyer wants, and once the buyer agrees to the price, the transaction is made. These desks usually have a vast network of buyers and sellers, including miners, early investors, and institutions. The major benefits of crypto OTC trading are privacy, the ability to trade large amounts without impacting the market, and a better price. However, it’s essential to be aware of certain risks such as counterparty risk, where the other party may not fulfill their part of the deal.
