Nov 06, · 1. Bitcoin OTC Brokers vs. Trading Platforms. The two main options you have for buying large amounts of Bitcoin are OTC brokers (OTC = over the counter) or traditional Bitcoin trading 24crypto.de brokers refer to companies or individuals willing to sell you Bitcoins directly as opposed to an automated trading platform. Oct 18, · OTC trading in bitcoin works in a similar fashion, with a broker facilitating the negotiations between private buyers and sellers. The main job of an OTC broker is to find these buyers and sellers of bitcoin, and to connect them privately. That’s the biggest difference between traditional exchange-based trading and over-the-counter trading. Jan 13, · Over-the-counter (OTC) are entities that allow the buy and sell of large quantities of Bitcoin and other cryptocurrencies. OTCs offer more private and personalized services to institutions and high net-worth individuals who need a high degree of liquidity and privacy.
Trading bitcoin otcTop 5 Bitcoin OTC Brokers: Efficiently trade large volumes of Bitcoin
OTC desks allows institutions and high net-worth individuals to buy Bitcoin without a having dedicated trading desk. OTC offices can be either regionally located, serving local clients or global. These brokers can provide very personalized services and even in person meetups.
Traditionally in the stock market world, OTC desks facilitate trading of securities that are not listed on formal exchanges, e. OTC desks have a network of buyers and sellers. The trades themselves are facilitated by OTC broker-dealer who will locate and negotiate directly with prospective buyers and sellers over computer networks or by phone.
This is contrasted from trading over exchanges where the prices and order books are publicly available. For OTC desks, their broker-dealers will negotiate the trade price for you.
Trades are also not publicly listed giving the parties privacy. Therefore, to fully understand what is going on in the cryptocurrency markets it is important to consider what is also happening at OTC desks. This is because large transactions happen on them on a daily basis. Big players looking to buy or sell large quantities of cryptocurrencies are better off using an OTC broker. This is because a single exchange no matter how large will not have the liquidity necessary to fill large order blocks.
This amount is much larger than the fees charged by OTC brokers. The second advantage of using OTCs is that they can offer to lock in a particular quotation with the option to settle at a later time. This gives people additional flexibility to move funds from banks or cold-storage such as the Ledger Nano X.
However, depending on who you are, one upside or downside of OTCs is that they are not transparent. So while you can try to gauge whether there is a lot of trade flow through an OTC desk by reading their reports if any , there is no way you can verify if they are being truthful. On the other hand you can conduct trades privately compared to on exchanges.
This guide outlines the general steps involved in trading with Over-the-Counter Brokers. Generally speaking, brokers provide similar on-boarding and trading experiences. It is important to remember all brokers will require verification of your identity, known as Know-Your-Customer KYC registration.
On top of this, brokers will verify the source of funds to prevent money-laundering. Sign up to the broker via website, email, call or in-person meetup. They will usually ask about the type and quantity of cryptocurrencies you would like to sell.
Every broker will require you to fill in onboarding documents and legal disclaimers. Once on-boarded, they will give you a communications channel. You can choose whether to accept the price quotation or not.
If you agree, the trade is immediately confirmed and the trade will provide you with a deposit address. Once the deposit is received, the order is no fully executed and you will receive your trade.
We compiled the list of the biggest OTC brokers around the world. Bitcoin OTC brokers play a very important role in China due to a government ban on cryptocurrency exchanges. They operate by directly connecting buyers and sellers of Bitcoin. To reiterate, Alipay closely monitors over-the-counter transactions to identify irregular behavior and ensure compliance with relevant regulations. If any transactions are identified as being related to bitcoin or other virtual currencies, Alipay immediately stops the relevant payment services.
One of the biggest concerns of OTC brokers and trading is the risk of exposure to criminal funds. This is because OTC desks who do not perform proper due diligence on source of funds can come into contact with tainted coins.
In a report, cryptocurrency research company Chainalysis released a report on money laundering in the exchange and OTC space. The report accused some OTC desks of illegally taking laundering funds for private clients.
In order to protect yourself from such activity, ensure you are trading with legitimate brokers who have proper KYC. Will OTC brokers accept cash? Often OTC brokers will have a cash option — for both buying and selling Bitcoin. On top of this, proof of funds may also be requested. Do OTC brokers require my Identity? To comply with anti-money laundering laws, OTC brokers will require you to submit official documentation such as Identity, Proof of address, bank account statements, proof of income or proof of funds.
Is there a Bitcoin Limit? Most OTCs do not have a maximum limit on the amount of Bitcoin you can buy or sell. Order sizes of or above BTC are common place for these brokers. How do I buy Bitcoin Anonymously Privately? The best way to buy Bitcoin without a record is via cash or peer-to-peer transactions.
Are there OTCs for Altcoins? There are OTC services for altcoins and even coins that are not yet listed on exchanges. These OTCs will function similar to a matchmaker — matching sellers and buyers of a particular asset.
One such example is Silverway — an OTC deal platform and deal aggregation platform. How do I find out the volumes handled by OTCs? OTCs are no obliged to provide trading data such as daily volumes, prices or order books. However, some OTCs provide annual reports or blog posts which contain aggregated volume data. How does OTC broker actually trade the coins? OTC desks are commonplace in the traditional financial markets, especially in the bond markets.
OTC trading in bitcoin works in a similar fashion, with a broker facilitating the negotiations between private buyers and sellers.
The main job of an OTC broker is to find these buyers and sellers of bitcoin, and to connect them privately. OTC trades are conducted privately without the use of a public order book. This provides privacy to the clients, but it also allows for the movement of large amounts of bitcoin without disrupting markets or moving the price of bitcoin excessively.
Even on the largest cryptocurrency exchanges, liquidity can be volatile, or just plain inadequate, making it very inefficient for the exchange of large amounts of bitcoin. Instead, these large orders are often broken up into smaller orders, with each filled by a different counterparty.
Using an OTC desk can eliminate slippage since buyers and sellers are matched at a price agreed upon before the trade takes place. OTC desks are also excellent for those looking to remain anonymous. This can also help avoid extreme price movements in reaction to large buy and sell orders.
An OTC desk also avoids the problem of order limits and the lack of fiat on-ramps. OTC desks help buyers and sellers customize trades, and avoid the restrictions encountered on centralized, public-facing exchanges. The client list of bitcoin OTC trading desks includes high-net-worth individuals, hedge funds, VC funds, bitcoin mining companies, and institutional investors.
Large bitcoin mining operations are usually among the sellers since the OTC desks are the best way for them to exchange the large amounts of mined bitcoin for fiat currency. On the buying side, institutional investors benefit greatly by avoiding exchange-based slippage and trading limits.
OTC trading is becoming increasingly popular and profitable for trading desks since new OTC brokers continue popping up, even during the bear market of They have more recently been joined by new OTC trading desks being started by the centralized exchanges. Many of the major exchanges , including Binance, Coinbase, Poloniex, Bithumb, and Bittrex, have all opened OTC trading desks to service institutional clients and high-net-worth individuals who want to avoid placing large trades on centralized exchanges.
This indicates institutional traders have been seeking this kind of off-exchange trading avenue. While it is impossible to know how large the OTC trading world actually is, several reputable firms have suggested that OTC trades account for times the volumes seen on centralized exchanges.
Smaller estimates say OTC trades account for 50 percent of all bitcoin trade volumes. To put that in perspective, it is almost exactly the same size as the global gold markets. That means the exchange is responsible for fund transfers. When a trade is made with an OTC broker, there is settlement risk between the customer and the broker. To get around this settlement risk, many OTC desks use escrow services as a third-party intermediary.
One other risk involved in OTC trades is the legality of cross-border payments.