WHAT IS OTC MARKET?
The advantages of Bitcoin OTC desks:
• Increased liquidity. Crypto exchanges typically have low liquidity. Bitcoin OTC desks provide opportunities to purchase large amounts of crypto in short periods of time WITHOUT slippage.
• Price protection. As mentioned above, price slippage is bad. OTC orders don’t alter prices when moving millions of dollars around in the market.
• Anonymity. Order depth doesn’t show up when using OTC desks.
• Fiat support. All crypto OTC desks support fiat, while many crypto exchanges do not.
• No limits. Coinbase limits purchases to $25,000 per day. Kraken only lets you withdraw $2,500 per day and $20,000 per month. Circle imposes a withdrawal limit of $3,000 per week.
• Rare tokens. Less common tokens can be bought in larger amounts than on exchanges.
How to access the OTC Bitcoin Market:
Determine your trade volume, frequency of trading, and legal structure.
•Moving tens of millions a week? Contact OTC desk like Golden SATS.
•And change the sentence
• Moving less? Head to boutique OTC trading desks like Golden SATS, which offer a professional hand holding throughout the process.
• Although there is no set rule, major exchange OTC desks are typically better options for institutions and funds who are geared towards satisfying the extensive due diligence and documentation required to deal with them, whilst boutique desks can easily handle orders of as little as 10 MILLIONS$ on an ad-hoc basis.
Make a trade. Simple place a request through your desk by calling them or writing them through designated chat channels.
• You’ll place an order, receive confirmation and further details on how to proceed and claim your crypto after making payment.
Claim your purchase. Typically an OTC will give you a bank account number to make a payment, while you give them a wallet address to send the crypto.
Fees are typically not associated with OTC desks, but the exchange rate you are offered may be a bit weaker than the mid-market rate at the time. Since OTC desks don’t make money through fees, they have to add a small margin on top of assets. Be sure to use only reliable OTC desks that have proof of their reputation.
Do not send money to unknown desks, because when something goes wrong it is nearly impossible in most cases to ever get your money back.
What’s going to happen to the OTC market in 2020?
Bitcoin OTC markets are more popular than both regular stock and regular crypto exchanges. The volume of Bitcoin traded OTC is around $20 billion/day, because the illiquidity of crypto exchanges forces many large traders to seek exit and enter positions through OTC desks to avoid slippage.
There will always be a demand for Bitcoin OTC trading, but the market will almost certainly shrink as crypto exchanges mature and consolidate. Miners will probably continue to use OTC markets because it is one of the quickest ways for them to liquidate their assets without attracting attention.
Many large institutions and big players already utilitize major desks offered by Coinbase, Circle, Bitmain, Antpool, and Fidelity, so expect this space to become even more competitive over time.
When institutional money eventually enters the crypto space in earnest, these major desks will be their port of entry. Because of this, the space will continue to thrive and develop as a way for whales (both individual and institutional) to move money without pulling the market with them.