What is otc crypto
Over-the-counter (OTC) trading
In the world of cryptocurrency, OTC trading has become increasingly popular due to its flexibility and higher liquidity compared to traditional exchange-based trading.
What is OTC Crypto Trading?
OTC crypto trading involves buying and selling cryptocurrencies directly between two parties, usually large institutional investors or high net worth individuals. This type of trading takes place outside of traditional cryptocurrency exchanges and is often done through a broker-dealer or other intermediary.
One of the main advantages of OTC crypto trading is its flexibility. Unlike traditional exchange-based trading, which is subject to market making spreads and price slippage, OTC trades can be executed at any time and with any size without affecting the underlying market. Additionally, OTC crypto trades are often executed at lower prices than on traditional exchanges, as they are not subject to the same level of liquidity or regulatory scrutiny.
However, OTC crypto trading is also more complex and risky than traditional exchange-based trading. It requires a significant amount of capital and expertise, and there is always the risk of counterparty risk and fraud. As such, it’s important for crypto developers looking to get started in OTC crypto trading to fully understand the risks and take steps to mitigate them.
How to Get Started in OTC Crypto Trading
If you are a crypto developer looking to get started in OTC crypto trading, there are several steps you can take:
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Research Broker-Dealers
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Develop a Trading Strategy
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Set Up a Trading Account
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Fund Your Trading Account
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Execute Your Trades
Case Study: Coinbase’s OTC Trading Platform
One of the most well-known examples of an OTC crypto trading platform is Coinbase’s Institutional Trading program. This platform allows institutional investors to buy and sell cryptocurrencies directly with Coinbase, using large orders that are not visible on traditional exchanges.
Coinbase’s Institutional Trading program has been highly successful, with the company reporting that it had executed over $50 billion in OTC crypto trades in 2018 alone. The platform has a range of features designed to make it easy for institutional investors to execute large trades, including customized pricing and dedicated account management.
However, as with any form of trading, there are risks involved in using Coinbase’s Institutional Trading program.
