OTC Over The Counter BTC Trading?

[very_452001]

Just to confirm big institutions like MicroStrategy, Paypal etc. are buying 1000's of Bitcoins not off exchanges like Coinbase where the small retail investors go, but they buy over OTC?

How are they buying 1000s of BTC when there is a shortage in BTC everyone claiming?

Just to confirm OTC trading does not affect or move the market price no matter how big the transaction is?

Who are the whales that have 1000s of BTC dumping selling it on the OTC desk? Why these whales don't have faith that BTC will go higher than 20k?

[jackg]

Who are the whales that have 1000s of BTC dumping selling it on the OTC desk? Why these whales don't have faith that BTC will go higher than 20k?

To get liquidity you need to trade. Sell and buy.

Maybe you want to cash out at a certain preset price or maybe you just want more cash... 19k is 19k if you have a few thousand btc. Dropping it now might be easier than trying to get someone to buy your coins at 200k or 1mil in a few years (assuming we go higher)...  A bird on the ground is worth 3 in the bush and 9 in the sky..

[bL4nkcode]

Yes, coinbase offers OTC method when buying and selling bitcoin, same with gemini. So I'm pretty sure paypal buys bitcoin through to large exchanges such as mentioned above.

Coz there's no anonymous whales in their right mind will undergo on some selling process to this large business such as paypal, coz business will only deal to business with paper works, contracts and etc.

[Josefjix]

PayPal wouldn't risk buying from OTC that doesn't have proposal legal backups because of fear of fraud, scam and theft. I believe coinbase has a large OTC model where PayPal can buy directly from. No individual whale would risk his/her BTC through back door trading.

[very_452001]

What you guys mean whales could risk their bitcoins through backdoor trading? Are OTC's regulated and also why most penny stocks are offered via OTC's?

The main question is are these big institutions that buying bitcoins now in huge amounts via OTC, does OTC big bitcoin trades affect market price of btc?

If OTC doesn't affect market price then who is buying bitcoins to push up the market price to near $20k now if institutional buying doesn't affect market price as its off the books right?

Lastly who is selling btc to institutions like paypal, microstrategy on the OTC desk if you guys say anonymous whales wont sell this way?

Can institutions get a discount buying bitcoins in bulk that is cheaper than market price on the OTC desk?

[Coinsfera]

Just to confirm big institutions like MicroStrategy, Paypal etc. are buying 1000's of Bitcoins not off exchanges like Coinbase where the small retail investors go, but they buy over OTC?

How are they buying 1000s of BTC when there is a shortage in BTC everyone claiming?

Just to confirm OTC trading does not affect or move the market price no matter how big the transaction is?

Who are the whales that have 1000s of BTC dumping selling it on the OTC desk? Why these whales don't have faith that BTC will go higher than 20k?

Usually, there are funds that provide bitcoin holdings at the institutional level. For example, Grayscale and NYDIG are one of them. They are not OTC they just serve as custodians to those coins. OTC is for the personal use of individuals. OTC is like buying cryptocurrency from an intermediary person. They make available those cryptocurrencies for you.

[Upgrade00]

If OTC doesn't affect market price then who is buying bitcoins to push up the market price to near $20k now if institutional buying doesn't affect market price as its off the books right?

Over the counter trades are not registered on exchanges and as such cannot influence price swings caused by buy and sell orders, hence it does not have an immediate impact on the price. It could however impact the market overtime if it becomes public knowledge and happens regularly, as is the case now.
There are two types of analysis that goes into trading:
• Technical analysis, and
• Fundamental analysis.

The first one focuses on changes in charts and market activity while the second highlights all other factors of the asset; halving activity, adoption rate, limit in supply, improvement proposals etc.
Big institutions buying into Bitcoin would be a factor in the fundamentals of Bitcoin, which raises public interest and demand along with it, even though the transaction did not happen directly through exchanges. This means more people would want to buy Bitcoin because companies like microstrategy and square are buying and also PayPal is integrating BTC into their protocol.

Lastly who is selling btc to institutions like paypal, microstrategy on the OTC desk if you guys say anonymous whales wont sell this way?

Exchanges have options for OTC trades. Some miners also sell Bitcoin rewards which they get.

Can institutions get a discount buying bitcoins in bulk that is cheaper than market price on the OTC desk?

I doubt this. I would expect there would even be a premium on newly mined coins.

[very_452001]

Just to confirm big institutions like MicroStrategy, Paypal etc. are buying 1000's of Bitcoins not off exchanges like Coinbase where the small retail investors go, but they buy over OTC?

How are they buying 1000s of BTC when there is a shortage in BTC everyone claiming?

Just to confirm OTC trading does not affect or move the market price no matter how big the transaction is?

Who are the whales that have 1000s of BTC dumping selling it on the OTC desk? Why these whales don't have faith that BTC will go higher than 20k?

Usually, there are funds that provide bitcoin holdings at the institutional level. For example, Grayscale and NYDIG are one of them. They are not OTC they just serve as custodians to those coins. OTC is for the personal use of individuals. OTC is like buying cryptocurrency from an intermediary person. They make available those cryptocurrencies for you.

When you say custodians do you mean like a paper holding? Like buying Gold ETC's instead of holding the real physical gold? Are these custodians vaults audited to see how much asset they really have before they issuing those paper IOU's?

What scary about this is what if these bitcoin banks and institutions start providing loans in btc paper contracts where there is regulation like a fractional reserve where they can lend out 10 btc's to every 1 btc they hold like the current banking system that already screwing us with.

Theres only 21million btc's out there so how do we stop lending btc's in the lending market where they could 121million btc's (10x) in circulation out there loaned like the fiat system we have.

Once bitcoin is regulated and gets government approval they will be bitcoin banks and bitcoin institutions that will do these shady practices with btc that can ruin the coin.

If OTC doesn't affect market price then who is buying bitcoins to push up the market price to near $20k now if institutional buying doesn't affect market price as its off the books right?

Over the counter trades are not registered on exchanges and as such cannot influence price swings caused by buy and sell orders, hence it does not have an immediate impact on the price. It could however impact the market overtime if it becomes public knowledge and happens regularly, as is the case now.
There are two types of analysis that goes into trading:
• Technical analysis, and
• Fundamental analysis.

The first one focuses on changes in charts and market activity while the second highlights all other factors of the asset; halving activity, adoption rate, limit in supply, improvement proposals etc.
Big institutions buying into Bitcoin would be a factor in the fundamentals of Bitcoin, which raises public interest and demand along with it, even though the transaction did not happen directly through exchanges. This means more people would want to buy Bitcoin because companies like microstrategy and square are buying and also PayPal is integrating BTC into their protocol.

Lastly who is selling btc to institutions like paypal, microstrategy on the OTC desk if you guys say anonymous whales wont sell this way?

Exchanges have options for OTC trades. Some miners also sell Bitcoin rewards which they get.

Can institutions get a discount buying bitcoins in bulk that is cheaper than market price on the OTC desk?

I doubt this. I would expect there would even be a premium on newly mined coins.

So basically your saying its the retail investors again that pushing the price of btc to near $20k now because they get all hyped up and FOMO from hearing the news that big institutions are buying BTC's now?

So were looking at Dec 2017 all again followed by another 3 year bear market because there is no big institutional buying in the technical analysis this time?

[moderator's note: consecutive posts merged]

[Harlot]

Yeah maybe they aren't directly buying Bitcoin into an exchange platform but it is highly likely they are still buying from exchanges that have OTC option for institutional investors like Coinbase. Because I don't think we will see a lot of whales that have this kind of service where they will sell directly their Bitcoins to other people. Them going to an exchange I think will also be more simple for them legal wise buying onto a official crypto-related business rather than someone who just holds a lot of Bitcoin.

[DdmrDdmr]

<…>

Microstrategy’s first 425M$ BTC purchase was made through Coinbase Prime, creating over 200.000 orders to fulfil the purchase in full, in what seems like a complex operation that routed the orders both over exchanges and other venues, controlling the flow of orders in time, to obtain the best available market prices, whilst trying not to infer in the price (which large buy chunks may have caused).

Not sure how OTCs manage large orders, but the above strategy I figure was well studied (while lacking disclousure of concrete details).


See:
https://news.bitcoin.com/coinbase-brokered-microstrategys-influential-425-million-bitcoin-buy/
(link to pdf with case study within the above reference)

[aesma]

Thanks DdmrDDmr, good link, I knew I had read somewhere that Microstrategy had bought BTC a bit like you and me do, not OTC, as for an OTC trade you need people on the other side of the trade ready to sell to you, quite difficult for such amounts.

[Upgrade00]

So basically your saying its the retail investors again that pushing the price of btc to near $20k now because they get all hyped up and FOMO from hearing the news that big institutions are buying BTC's now?

No I never said that. Firstly Bitcoin transactions are pseudo anonymous, so unless a company chooses to go public about their bitcoin holdings we probably wouldn't know about it. There is no guarantee that other public companies are not stacking up their portfolio.

So were looking at Dec 2017 all again followed by another 3 year bear market because there is no big institutional buying in the technical analysis this time?

I should have mentioned that  technical analysis and fundamental analysis are not mutually exclusive.

Also, I only tried to explain how such buys can influence the market sentiment without causing huge price swings during the purchase. It's impossible for buys like that of microstrategy which is about $4.7 million to not factor into a bull run long term (there are about a dozen of other cooperations publicly known to be purchasing as well).
Retail investors influence is still present, but big institutional money is also heavily present now and growling rapidly, this is surely not a repeat of 2017.

[TedMosby]

...

Who are the whales that have 1000s of BTC dumping selling it on the OTC desk? Why these whales don't have faith that BTC will go higher than 20k?

without these whales, these institutions couldn't buy bitcoins OTC.
without these institutions, bitcoin won't get the positive sentiments on this Q4 2020.
without these positive sentiments, the bitcoin price won't go up.
with the bitcoin price go up, these whales will get the benefit because I believe they still have a lot of bitcoin in their wallet.
they increase the value of their portfolio while cashing their bitcoin at the same time

[aesma]

It might be an association of whales. A well known krypto guy I can't remember the name of was saying he controlled something like 240000 BTC, pooled from several people.

For them it might make sense to trade OTC, or maybe a combination : sell OTC in big chunks, buy individually/have fun trading when the price is lower to reconstitute their stash.

There could be an advantage regarding tax authorities : having your sales made by a well identified company, at a certain price, makes it more "legit".

[ChrisPop]

As far as I know OTC trading desks do specialize in providing liquidity from multiple sources when an order is entered in their records. It is a commission-based model as any other conventional broker. Not too versed in the OTC environment so this is more like a guess than a certain thing.

[figmentofmyass]

Microstrategy’s first 425M$ BTC purchase was made through Coinbase Prime, creating over 200.000 orders to fulfil the purchase in full, in what seems like a complex operation that routed the orders both over exchanges and other venues, controlling the flow of orders in time, to obtain the best available market prices, whilst trying not to infer in the price (which large buy chunks may have caused).

Not sure how OTCs manage large orders, but the above strategy I figure was well studied (while lacking disclousure of concrete details).

the ideal is obviously direct order matching among OTC clients. this was a truly massive OTC order so that was impossible, of course. i'm sure any OTC desk would have done it the same way, with complex order algorithms across many exchanges/brokers to prevent slippage or moving the market too much.

i suspect the vast majority of OTC trades (on coinbase, kraken, bitfinex, etc) are closer to the low 6-figure - low 7-figure USD range. in those cases, direct order matching is more likely possible, so that spot prices are literally unaffected.

[very_452001]

Okay with that Coinbase Prime example explained above:

- These OTC buy orders or exclusive buy orders for the mega rich institutions that have a Prime account (Not Amazon Prime) does not affect the market price on the retail side? So a $0.5 Billion buy order for Btc on CoinbasePrime.com wont affect the market price for retail Investors on Coinbase.com?

- If these big institutional buy orders is not affecting the market price, so its the retail investors hearing the institutional buying who are FOMO from this and buying btc causing the market price to near $20k?

So to confirm its the retail investors pushing the market price up to near $20k now because retail investors are now hearing institutional buyers are buying now correct?

Big Institutional buyers are not affecting the market price?

[aesma]

Pure OTC can't affect the price. Moreover such deals don't make the news so even indirectly there can be no effect. Of course the people involved (selling or buying) might also be trading directly on the markets, so they might do something on the markets that only makes sense because of that OTC trade they made.

For example a whale sells 1000BTC OTC at a price of 10000$, then the price drops quite a bit and he decides to buy back, noone is ready to sell him 1000 coins back OTC, so he will buy on exchanges and make the price go up again.

In the case of the mega-rich institution like was said upthread the deals were not made OTC in the end, because they were too big, so instead they used thousands of orders, as if there were hundreds of people trading. This would potentially move the price, but just like whales use strategies to pump and dump, it's possible to use the opposite strategy to "not pump".

[very_452001]

Pure OTC can't affect the price. Moreover such deals don't make the news so even indirectly there can be no effect. Of course the people involved (selling or buying) might also be trading directly on the markets, so they might do something on the markets that only makes sense because of that OTC trade they made.

For example a whale sells 1000BTC OTC at a price of 10000$, then the price drops quite a bit and he decides to buy back, noone is ready to sell him 1000 coins back OTC, so he will buy on exchanges and make the price go up again.

In the case of the mega-rich institution like was said upthread the deals were not made OTC in the end, because they were too big, so instead they used thousands of orders, as if there were hundreds of people trading. This would potentially move the price, but just like whales use strategies to pump and dump, it's possible to use the opposite strategy to "not pump".

Okay you think these big institutions are not using OTC but instead are using prime Versions of Exchanges like Coinbase prime, Binance Prime to break a big order into 1000's of smaller orders that is spread over days to get the order filled by us retail sellers?

But are we retail sellers on the prime versions of exchanges to fill these institutional buy orders?

If they break a big order into 1000's of smaller buy orders then why cant they do it on a normal exchange that we retail investors use? Its confusing.

Is there a cross-platform compatibility for orders on either of these exchanges that is both prime & non-prime? For example a big institutional buy order on prime will get filled by 1000s of smaller retail sellers on the normal non-prime exchange?

Lastly will mega rich institutional buyers ever use decentralised exchanges if theres lots of liquidity on there?


Okay coming back here how do we know when Hedge funds and the big institutions start selling their bitcoins holdings? If its sold over OTC then that wont register bearish on the bitcoin market price right?

What indicators are there to see whether we know these big players have self off their 1000s of bitcoins? I'm talking about early indicators not articles in the wall street journal where that is a late indicator and by then btc price is already crashed. Best to sell before the crash.

These big players wont HODL even when btc crashes otherwise their rich clients will get angry at them and they could lose business & their clients right?

[moderator's note: consecutive posts merged]

[shield132]

I know case when one company was buying a lot of bitcoins from miners and in this case, it was BitFury if I am not mistaken.

OTC transactions will affect bitcoin's price but wait, it's not direct impact that it has but the psychological one. When "Joe" reads on website that PayPal is interested in bitcoin and hears that omg, PayPal buys thousands of bitcoins, then Joe will think that oh, if PP buys bitcoins, it means that price will rise. At least, the major payment service provider is interested in it, this should have a huge positive impact on bitcoin's price. And then Joe starts to sell bitcoin in high price while PayPal will have their own agreement with providers and price and negotiation will be different from real one.