OTC or Over-the-counter trading is an alternative to manually trading on an exchange interface, where a buyer and a seller transact a large amount of an asset. A price is agreed upon between buyer and seller which can be below, at par, or above market price depending on the asset, liquidity and market conditions. Over-the-counter Bitcoin transactions account for a large amount of global Bitcoin trading volume.
Specifically when it comes to Bitcoin and cryptocurrency, OTC is typically reserved for larger trades, where price slippage could be an issue if the trade wasn’t conducted in this manner. OTC is definitely the trading method of choice for high-net-worth individuals or institutions who are buying and selling large amounts of cryptocurrency.
Each cryptocurrency OTC desk will have a certain threshold of minimum or maximum amounts that they are willing to process through their desk. Because OTC doesn’t take place on exchanges that have publicly available data, it’s hard to get a picture of how much cryptocurrency is being traded on OTC markets. However, it’s estimated that the majority of cryptocurrency traded is done through OTC, with some trades being worth hundreds of millions of dollars.
OTC is not just for cryptocurrency, it‘s been around for decades in other financial markets. OTC trading occurs with commodities, stocks, bonds, and derivatives. Over-the-counter trading has been around for much longer than cryptocurrency, and is used often in other financial marketplaces.
When buying or selling large amounts of Bitcoin (BTC) or other digital currency on an exchange at one time, traders can experience “slippage”. This occurs when you buy up all of the low price orders and your trade will slip into other higher priced orders in order to fill. This gives you an average price much higher than your expected market price. Slippage can be frustrating because you end up getting less than you are expecting, at an average price you can’t accurately predict. In order to avoid slippage, traders often price out larger amounts OTC so they know exactly the price they are paying and how much of a commodity they will receive.
We all know cryptocurrencies have extremely volatile markets, meaning the prices can swing by 15% in a single day, or even 2-3% in a single minute! It can be frustrating for traders to try to time the market to hit a certain price, even with a limit order. With OTC, you can fight the volatility and lock in a certain price in a single moment, knowing it won’t shift between the time you agree to the price and the time the trade is executed. When you lock in the price, it will apply to the entire amount you are trading, protecting you from both volatility and slippage.
OTC trading will require you to agree to a price with a trader, meaning you will always get personal, one on one service when trading OTC. The trader will walk you through the quoting process, telling you exactly the price you will pay and the price per unit you will get. Any questions you may have can be answered in real time, instead of waiting for a support team to get back to you.
OTC trades can be completed in a matter of seconds, unlike a limit order on an exchange which could take hours, days or weeks to completely fill. Once the order is complete, you will have access to your digital currency or FIAT almost immediately. It’s a hands free experience!
1) Choose an OTC Bitcoin desk. Make sure to do some research to make sure they are legitimate.
2) Fund your OTC account with cryptocurrency or FIAT.
3) Schedule a call to get a live quote from your broker.
4) Agree to the price and have your broker execute the trade.
5) Receive the digital currency in your wallet or have a wire transfer sent to your bank account.
If you are looking for an OTC Bitcoin desk in Canada, look no further than Bitbuy. Bitbuy has been trusted in the Canadian digital currency industry since back in 2013, when we were originally founded as InstaBT. This year alone, tens of thousands of users have been buying Bitcoin in Canada through Bitbuy Express, Bitbuy Pro Trade and Bitbuy OTC. The Bitbuy OTC desk has competitive rates, white glove customer service, and an extremely easy process for beginners and experts alike. If you are interested, check out more information about our Canadian Bitcoin OTC desk, or reach out directly to [email protected]
If you are looking for an international option to buy Bitcoin or cryptocurrency via OTC, this article has quite a long list of options.
Thanks for reading, and happy trading!
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