Over-The-Counter (OTC)

Over-The-Counter (OTC) trading refers to the direct exchange of assets between two parties without the use of a centralized exchange. In the cryptocurrency market, OTC trading is particularly popular among institutional investors and high-net-worth individuals who wish to execute large-volume trades without impacting the market price. OTC trades are often facilitated by brokers or specialized OTC desks, which match buyers and sellers, provide liquidity, and ensure that transactions are completed smoothly. This method of trading offers several advantages, including personalized service, reduced slippage, and enhanced privacy.

One of the primary reasons for using OTC trading is to avoid the market disruption that can occur when large trades are executed on public exchanges. In a typical exchange environment, a large buy or sell order could significantly move the market price, resulting in unfavorable trade execution and increased costs. By conducting trades OTC, parties can negotiate prices directly and execute the trade without the risk of causing price volatility. This is especially important in the relatively thin and volatile markets that characterize many cryptocurrencies.