Top OTC Trading Platforms
What Are OTC Trading Platforms?
In the digital asset market, there are different ways to make transactions. For example, investors can buy and sell cryptocurrencies bypassing traditional trading platforms. This method is called over-the-counter trading (OTC). Let us understand what its advantages are and whom it suits.
Exchange trading, as its name implies, is trading on specific crypto exchanges: Binance, KuCoin, Kraken, Bitstamp, etc. All transactions are brought to the internal market of the exchange and are reflected in the price chart.
The essence of over-the-counter trading is clear from the name – the seller and the buyer can make a deal directly with each other, without the participation of the exchange.
OTC trading is the execution of transactions on sites where there is no central authority and where transactions are not reflected on the chart. Simply put, OTC (over-the-counter) trading is the exchange of cryptocurrencies on aggregator sites where there are sellers and buyers.
However, there are still intermediaries in such transactions.
In fact, OTC trading platforms provide brokerage services. The task of such platforms is to supply clients with liquidity for transactions of any volume and regulate the process.
The services of OTC platforms are often used by large investors. Many centralized digital asset exchanges have separate platforms for OTC transactions. OTC crypto trading is divided into 2 subtypes:
P2p sites, that is, sites where sellers register and often provide their data. These sites usually implement an escrow account mechanism, i.e. smart contracts, when after the buyer contacts the seller, the latter transfers the cryptocurrency to the smart contract and actually loses control over it. After receiving money from the buyer, the smart contract transfers the crypto to the buyer's address.
Exchangers. It can be both web-interfaces and bots in Telegram. Both web- and TG-exchangers work according to the same principle: you transfer money to the seller, and he sends you cryptocurrency to your address. Yes, it can be unsafe, as it is easy to run into scammers, however, many exchangers have been operating for more than a year and have earned a good reputation, albeit an unofficial one.
What Are Pros of OTC Platforms?
OTC platforms provide an opportunity to remain quasi-anonymous because:
Firstly, when making a transfer from a card, you do not indicate your full name anywhere (although it is easy to track this according to bank data);
Secondly, most often when transferring funds for the purpose of payment, you indicate “debt repayment” or something like that, without saying that this is a transfer for the purchase of a cryptj. And you still need to try to connect the transfer of money with the receipt of the crypt to your address.
We say "quasi-anonymity" and not "complete anonymity" for the reason that the competent authorities can easily find out to whom, when and how much money you transfer from your card. However, it will be difficult to detect the link between the transfer of money and the transfer of crypto to your crypto wallet.Yes, if you get in touch with the seller of the crypt, he will report the transfer of the crypt to the wallet, however, proving that the crypto address belongs to you is a very difficult task, which can only be established thanks to the technology of analyzing the digital footprint or your Internet habits.
Ability to Conduct Large Transactions
OTC platforms for trading offer users enough liquidity to handle large amounts. OTC is of interest not only to small investors seeking to remain anonymous, but also to large "whales", and here's why. The fact is that while the volume of trading on crypto-exchanges is small, and companies with large amounts that buy crypto will definitely cause a change in quotes.
It’s always like this on exchanges: if a one-time large buy position is opened, this leads to a price increase in the direction of the transaction. This is not profitable for whales, because they want to buy cheap. Each purchase of a larger amount will somehow move the price up, and the next purchase of the company will have to be made at a higher price.
Large players seek to buy on the over-the-counter market so that their transactions are not reflected in the currency charts. Often they do this gradually, in several tranches, over several days, since OTC trading in large volumes involves one or more sellers holding large amounts of currency.
You Can Save
The over-the-counter market is characterized by more attractive prices. You can also save money due to the absence of exchange commissions, which can reach several percent of the transaction amount.
Some OTC platforms for trading offer anonymous transactions without entering trade data into trading books. For those long-term investors who don't want to get involved with KYC, OTC trading is a viable option.
On exchanges, it is not always possible to sell or buy a large amount of coins at a single cost due to the lack of counter offers from buyers and sellers. As a result, the amount has to be split into several small transactions, instead of one large one. In the process, the price of an asset can change significantly. As a result, the result of the operation, with a high probability, will differ from the expected.
Independence From Stock Exchanges
During times of high market volatility, many large platforms often experience technical difficulties and go offline. Such a trading platform may unexpectedly be unavailable for technical reasons. OTC platforms for trading are stable.
What Are Cons of OTC Cryptocurrency Trading?
Increased level of risk. It can be avoided by choosing a trusted broker.
A small selection of cryptocurrencies. Most top OTC trading platforms are focused on working only with the most popular coins, including the leaders in capitalization – Bitcoin and Ethereum.
Operating conditions on OTC platforms can vary significantly.The difference in rules can reveal alternative advantages and disadvantages, as well as hide some of the pros and cons of OTC platforms.
Over-the-counter trading in cryptocurrencies may be of interest to users who need to buy or sell a large amount of assets at a time at a bargain price.
With the growing interest of market participants in OTC trading, many proposals for organizing work from popular projects that have earned the trust of users have appeared on the network. As a result, the security level of over-the-counter trading in cryptocurrencies has increased.