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Author Topic: How to peer-to-peer OTC crypto trades occur?  (Read 75 times)
Marahunter
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April 06, 2018, 09:07:56 PM
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How is bitcoin traded over the counter, when I hear about whales purchasing bitcoin over the counter for example, how are those transactions organized?
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April 06, 2018, 09:24:53 PM
Merited by DarkStar_ (4), suchmoon (2), butka (1)
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An OTC trade only occurs when a large amount of money is being traded at once. Some people speculate that the 1% of traders that use OTC have more volume than all the exchanges, but this cannot be verified.

Let's say a someone wants to buy $1 million worth of Bitcoin. They could either:
1) Create a market buy for $1 million. This would drastically increase the market price
2) Create a limit buy order for $1 million. This would create a massive buy wall and their order would take a long time to fill. In addition, prices would increase as those wanting to sell their bitcoins would have to sell above the buy wall price.
3) Trade OTC, completely avoiding the 2 problems above

An OTC trade is when 2 parties agree to sell/buy a set amount of bitcoin all at a set price. This completely avoids the exchanges, benefiting both the buyer and the seller (If the seller sold 1 million all at once the price would go down and vice versa). OTC trades are usually done through a trusted broker. The problem is, the vast majority of these trades are private, so it's hard to know the amounts transacted, how the deal was done, and who the deal was done through. However, there are some public brokers including but not limited to:

https://www.itbit.com/otc
https://cumberlandmining.com/
https://genesistrading.com/
http://richfund.pe/

In addition, Kraken has a dark pool service, which is essentially a blind OTC service (in a traditional OTC trade you would know who you are buying/selling to)
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