Just wondering about the mechanics of OTC (over the counter) transactions and how, or when they have an impact the price of bitcoin.
Whales and institutional investors buy BTC over the counter so as to ensure that the tx does no create any reaction at all in the market, if some of those trades were carried out in exchanges, it could have triggered people into action, probably to sell their coins due to panic and this would make the price to fall.
Are spot ETF providers like Fidelity and Blackrock buying bitcoin OTC?
Probably they are, i.e. Coinbase exchange is the custodian for BlackRock's BTC, so it is possible they buy their BTC's over the counter and then move it to Coinbase to store it. But i don't think anybody can be sure where they buy it from, it could even be straight from BTC miners as well, which is still OTC trade.
I'm guessing when buying OTC you are buying the bitcoin directly from the exchange instead of the usual process of being matched with other seller(s) on the exchange?
It must not be from the exchange, it could be from miners or big time investors who want to sell a large amount in BTC, the exchange can act as the OTC trading platform that matches the buyers and the sellers, but the trade happens outside of the exchange.
Is there some kind of delay effect on price when someone buys bitcoin OTC?
The trade is done in private and isn't public, and people don't have to sell off their coins in panic, so OTC trade minimizes its impact on the market.
What about selling OTC? How does that work?
OTC trading platforms matches buyers and sellers.