14 January 2022
Traditional exchanges and OTC trading are the two basic ways to trade financial assets, such as stocks, bonds, derivatives, and, more recently, cryptocurrencies. While there are many traditional cryptocurrency exchanges where traders can execute crypto transactions, OTC trading is becoming more and more popular. Traders with a wealthy wallet often choose to trade via a crypto OTC trading platform rather than going through a traditional exchange.
Although crypto OTC trading has many significant benefits over traditional cryptocurrency exchanges, it is still misunderstood by many, especially beginner traders. This article offers a simple explanation of crypto OTC trading and its benefits. If you plan to trade large amounts of cryptocurrency, gaining more insights about the OTC market and choosing the right crypto OTC trading platform is crucial to making the most out of your transactions.
OTC trading stands for over-the-counter trading. It is a stock or cryptocurrency trading process that happens via an OTC desk or an OTC platform. Contrary to traditional crypto exchanges, the OTC market is decentralized with no central and physical location. In general, crypto OTC markets are subject to less regulation than conventional cryptocurrency exchanges, which is why they are becoming the preferred trading way for many experienced traders.
On the OTC market, participants trade directly with each other or through a middleman, such as OTC desks or OTC trading platforms. The transaction happens when two parties - the buyer and the seller - agree on the price of the crypto-to-crypto or crypto-to-fiat transaction. Often, in order to execute such as transaction, there is a need for a crypto OTC trading platform, or in other words, a crypto OTC desk. A crypto OTC trading platform plays the role of a matchmaker. These platforms often dispose of a vast network of buyers and sellers. When one person wants to sell a specific amount of cryptocurrency, the OTC desk agrees to buy it at a particular market price. Then, it sets out to find a buyer from its network who wants to purchase that amount of cryptocurrency at a price slightly higher than the one previously agreed upon with the seller.
The price of the transaction remains undisclosed publicly until the transaction is complete. This high level of anonymity and privacy is one of the main reasons why large-scale traders choose to trade over the counter instead of listing their transactions on a traditional cryptocurrency exchange.
Trading via a crypto OTC trading platform is an excellent option for wealthy investors who want to allocate large amounts of cryptocurrency in their wallets. Since trading large amounts of cryptocurrency via traditional exchanges imposes several issues, such as price slippage, risk of theft, and lack of anonymity, traders with wealthy wallets often choose OTC trading instead.
But contrary to popular belief, OTC trading is not just reserved for wealthy and experienced traders. In fact, all traders can benefit from trading via a crypto OTC platform. For example, trading over the counter is also a suitable option for smaller traders who want to buy or sell crypto assets that are unavailable on traditional exchanges. It is also an excellent solution for traders looking to keep their cryptocurrency transactions private and direct without going through a traditional exchange.
Trading via a crypto OTC trading platform has several benefits over a standard trading platform or a traditional cryptocurrency exchange. Let’s take a look at a few of them:
Trading large amounts of cryptocurrency on traditional exchanges often comes with the risk of price slippage. Since traditional exchanges do not have sufficient liquidity to execute large transactions, such transactions need to be split into smaller chunks. Unfortunately, this often means that the price will have increased by the time the last piece of the large transaction is completed. When trading via a crypto OTC trading platform, wealthy traders can avoid the risk of price slippage.
Another significant benefit of crypto OTC trading platforms is that they allow faster turnaround times. This is because the process of executing a large transaction is more straightforward: the trader and the OTC platform agree on a single transaction with a fixed price which is then completed in a short amount of time.
When it comes to trading large amounts of cryptocurrency, traditional crypto exchanges can charge high transaction fees. The higher the amount you’re trading, the higher the commission on your transaction. A crypto OTC trading platform can help you significantly reduce those massive fees and make the most out of your funds.
OTC platforms do not impose such strict limitations on large transactions as traditional exchanges do. This means traders can buy and sell considerable amounts of crypto assets without adhering to inconvenient limits.
Trading via a crypto OTC trading platform enables traders to keep their transactions private. Unlike traditional exchanges, where every cryptocurrency transaction is publicly displayed for everyone to see, OTC platforms allow traders to trade anonymously and privately. This also reduces the risk of hacking and theft of funds that often happen on traditional exchanges, especially when it comes to bigger transactions.
Are you looking for a crypto OTC trading platform that fits your needs as a large-scale trader? NextHash is a reliable crypto OTC trading platform that offers more benefits to all traders who want to trade their cryptocurrency over the counter. In addition, our experience as an OTC desk makes us the perfect choice for all traders with a wealthy wallet who are looking to trade large amounts of cryptocurrency.
At NextHash, we combine everything the best crypto OTC trading platform should have: fixed fees with no hidden costs, ease of use, and expert insight. Since NextHash offers the lowest prices on the market, you can make the most out of your transactions. Furthermore, you can be sure that your transactions will be safe with our platform security. Click here for more information or get in touch with us.