If you are looking to trade large amounts of cryptocurrency through traditional exchanges, you may run into several problems. The main issues that high-volume cryptocurrency traders experience when going through conventional exchanges are price slippage causing an increase in the investment, restrictive trading limits, as well as the risk of hacking and theft of funds due to cybersecurity issues. This is why opting for OTC trading and going through an OTC cryptocurrency broker to buy and sell large amounts of cryptocurrency can be the best solution for you.
In this article, we will explain why OTC trading in crypto might be the best solution for you and what are the advantages of using an OTC broker.
Why Is OTC Trading in Crypto So Important?
The concept of OTC trading emerged before blockchain and cryptocurrencies to avoid the mediation of large institutions in the trading process. OTC traders trade directly between themselves, avoiding external mediators and, as a result, going through strict regulations and paying costly fees. The OTC market is a decentralized, and therefore, unregulated market. On the OTC market, traders can buy and sell financial assets through a vast network of brokers, agents, and financial entities who act as intermediaries.
OTC trading is used for trading various financial assets, such as stocks, derivatives, and commodities. OTC trading is also an excellent way to trade cryptocurrency, as it allows for direct trading of more significant amounts of crypto in a much less complicated way. OTC trading in crypto solves three main problems that most advanced cryptocurrency traders experience: price slippage, cybersecurity risks, and higher trading limits imposed on traditional cryptocurrency exchanges. This is why high-volume cryptocurrency traders choose OTC trading instead of going through traditional exchanges.
Differences Between Traditional Exchanges and Crypto OTC Markets
Let's look at the main differences between trading on traditional cryptocurrency exchanges and crypto OTC platforms.
Traditional cryptocurrency exchanges, such as Kraken or GDAX, act as intermediaries between buyers and sellers who trade their cryptocurrency depending on the current market prices. With OTC trading in crypto, there is no intermediary. Instead, the trade is made directly between the traders. If large amounts of cryptocurrency are involved, the transaction is made between the trader and an OTC cryptocurrency broker. In addition, on traditional exchanges, trades exist in the public domain, while the OTC platforms allow the traders and their transactions to remain private.
Another difference between traditional exchanges and crypto OTC markets is that OTC platforms offer traders the opportunity to access assets that haven't been listed on conventional exchanges yet. On traditional exchanges, cryptocurrencies must meet strict requirements to be listed and traded, while the crypto OTC platforms allow for greater flexibility and have fewer requirements.
Moreover, when trading large amounts of cryptocurrency on the OTC platforms, traders avoid high fees they would otherwise pay on a traditional exchange. Trading on OTC platforms can also help traders avoid trade delays and price slippage.
What Is an OTC Cryptocurrency Broker?
An OTC cryptocurrency broker is an intermediary in the process of cryptocurrency trading on the OTC market. To be more specific, an OTC broker connects buyers and sellers who are a perfect match for the particular trade. Therefore, OTC brokers are matchmakers for cryptocurrency traders who want to buy or sell large amounts of crypto.
The primary role of an OTC broker is to develop their own network of cryptocurrency traders. OTC brokers are the main point of contact between buyers and sellers looking to trade large amounts of cryptocurrency. Since they operate on an unregulated market, their role is to facilitate transactions that otherwise would be riskier and more complicated to complete.
Advantages of Using an OTC Cryptocurrency Broker
Using an OTC broker to trade large amounts of cryptocurrency has many significant benefits. Here are the main ones.
1. Avoiding price slippage
The main advantage of trading through an OTC broker is avoiding price slippage and costly fees that exchanges charge for trading significant amounts of cryptocurrency. Price slippage happens when a trader wants to buy or sell large quantities of crypto. Usually, they would need to go through a complicated process of selling small chunks of their crypto to different buyers. Because there are various buying completing each transaction at different times, it may be impossible for the trader to sell their crypto at the same price to each one of those buyers. Going through a broker can help traders avoid this problem, as their broker will connect them with another trader who is a perfect match for the planned transaction. They also change a single, previously agreed upon fee for the completion of the transaction.
2. Conserving anonymity
The next important benefit of using an OTC cryptocurrency broker is that traders on both ends of the transaction can protect their anonymity by communicating through their broker. Moreover, since transactions on an OTC market are completed directly between the traders and the brokers, the transaction price remains private. Therefore, it is not publicly displayed, as it is in the case of traditional cryptocurrency exchanges.
3. Lower exchange limits
One of the main restrictions imposed on traders who want to buy or sell large amounts of crypto are the trading limits on traditional cryptocurrency exchanges. However, by using an OTC cryptocurrency broker, traders can avoid these restrictive limits and trade their desired amount of cryptocurrency without restrictions.
How Can Nexthash Help Your Business?
Trading large amounts of cryptocurrency through traditional exchanges can pose significant obstacles to more experienced traders. Trading through an OTC cryptocurrency broker, such as Nexthash, will enable you to buy and sell large amounts of cryptocurrency much more easily and quickly. Nexthash specializes in managing transactions with large amounts of cryptocurrency, making the process smooth for our clients with the help of our team. At Nexthash, we offer our high-volume customers single quote price orders, fast order execution, and simplified procedures. Thanks to Nexthash, buying and selling as much cryptocurrency as you desire has never been easier! Click here and contact us for more information.