Over-the-counter (OTC) trading desks have existed in traditional finance for a long time, but their use in trading cryptocurrencies is not talked about too often. In this article we take a detailed view of OTC markets for those looking to safely trade in large amounts of cryptocurrencies.
What is a Cryptocurrency OTC Trade?
OTC Trades are deals that take place in OTC markets. OTC markets are made up of buyers and sellers interested in trading large volumes of cryptocurrencies outside the public eye.
An OTC trading desk specializes in facilitating high volume trades directly with their clients. These trades are private peer-to-peer transactions, and only the parties to the trade i.e. the OTC desk and the trader know the buy or sell rate and quantity. In a crypto OTC market, traders can swap crypto-with-crypto, or make fiat-to-crypto trades.
Who is OTC Trading For?
OTC Desks cater to a range of traders and investors that want to buy or sell large amounts of cryptocurrencies. OTC desk customers usually consist of: financial institutions, ICOs, venture capital firms, hedge funds, cryptocurrency whales, miners, small asset managers and other high net worth individuals.
The market for OTC trades in cryptocurrencies has steadily grown over the past couple of years. Big financial institutions like Tesla, Microstrategy, Goldman Sachs, and businessmen like Elon Musk have used OTC desks for high volume cryptocurrency transactions.
Why High Volume Cryptocurrency Traders Prefer OTC
High net worth individuals, and other investors prefer conducting high volume cryptocurrency transactions via an OTC desk for a number of reasons. OTC desks are designed to cater to the exclusive concerns and requirements of a high value transaction.
To conduct a large volume cryptocurrency transaction in one go, both parties need to have high liquidity. Traders will find that cryptocurrency exchanges may not be able to offer that liquidity to them. If a trader wants to buy 100 BTC in a single transaction, they may not be able to find a seller for 100 BTC on an exchange. If a trader chooses to buy 100 BTC from an OTC desk, the desk will ensure there is enough liquidity to meet the trade limit without delay. Thus, for high value transactions, OTC desks are reliable.
Traders can face a lot of slippage on large transactions on an exchange. If a trader attempts to buy 400 BTC from an exchange they would have to buy it from multiple sellers, and may not be able to buy all 400 BTC at the same time and price. By the time a trader’s order of 400 BTC is fulfilled on an exchange, the original market buy or sell price of that cryptocurrency may have changedsignificantly. This difference in bid price, and price at which the order is fulfilled is called slippage.
OTC desks offer price protectionto traders on large transactions. This means that if a trader was to place an order of 400 BTC with an OTC desk, they would get all 400 BTC at one price in a single transaction. Buying 400 BTC from an OTC desk will also save on transaction fee, which would be much higher if the purchase was made via bank transfer or credit card.
Unlike exchanges, there is no withdrawal limit in OTC Desks, and traders can make bespoke arrangements of withdrawal transfers. Private deals ensure that the market price of cryptocurrency is not disturbed. This is a great advantage for whales and investors that want to buy or sell large amounts of cryptocurrency without making too much noise in the market.
How is OTC Trading Done?
Trading with an OTC desk is simple. Traders place a request for buying or selling a cryptocurrency to the OTC desk. The OTC desk in return quotes the trader a price which they can accept or reject. Once the trader has accepted a price, the OTC desk will take the responsibility to provide the trader with the agreed amount.
OTC desks follow two types of models, the principal desk model and the agency model. A principal desk uses their own funds to conduct transactions with traders. In this process, they assume the risks in case the cryptocurrency price goes up or down. Agency desks on the other hand do not trade with their own funds, and don’t assume any market risk. Traders fund their accounts with the agency desk, and quote a range within which they would like to trade. The OTC desk then uses the funds deposited to find the best deal within the range quoted.
OTC Desk at Rain
The Rain OTC Desk is a safe and fast bespoke execution and settlement service tailored for investors who would like to trade large volume crypto transactions. Private deals for buying or selling cryptocurrencies are enabled through a broker-dealer network which offers deep liquidity and best prices.
Our dedicated team of professionals at Rain OTC desk ensure that our customers get the best price by avoiding slippage. Large transactions are managed and executed outside the exchange without affecting the market price of the asset.
Rain OTC Desk offers a range of benefits like ICOs, and the option to trade in multiple cryptocurrencies. While maintaining the privacy of customers is important to Rain, it is equally important to provide traders with technical support. At Rain OTC Desk, along with 24/7 customer support, traders are provided with a direct personalized relationship with a trusted broker to answer all their questions.
Trading at Rain OTC is easy, secure and fast. All customers are required to complete mandatory Know Your Customer (KYC) requirements to protect traders from scams. Depending upon their need, traders also have the option to make crypto-to-crypto transactions or crypto-to-fiat transactions.
To offer the important advantage of speed andadditional security for investors, the Rain OTC desk has TRY and USD accounts in Turkish Banks.
To open a position with Rain OTC, traders must ensure they satisfy the minimum eligibility requirements per trade. For all major coins the minimum limit per trade is $250,000, while for all other coins, the minimum limit per trade is $100,000. Alternatively, for more information, traders can provide Rain with their name, email address, and a few details about their enquiry and our representatives will contact them.
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