What are over-the-counter markets or the well-known acronym OTC, from the English “Over The Counter”?
Well, for you to understand you need to know that there are two basic ways to trade in the cryptocurrency financial market: Exchanges and OTCs.
Just as the New York Stock Exchange deals with equity investments, an equivalent would be an Exchange of crypto assets that essentially acts as a mediator between buyers and sellers of cryptocurrencies. Traders record prices for which they are willing to sell assets (requests) and others record prices for which they wish to buy assets (bids). When an offer and a request overlap, the exchange takes place.
OTC differs in that the transaction takes place directly between two parties, one of which is typically a “table” - a business dedicated to the purchase and sale of a particular class of assets. In an over-the-counter negotiation, two parties agree on a price and calculate the transfer of the assets between them. No one but the parties involved has access to the price and volume.
In short, over-the-counter markets are where most of the trade takes place in the global financial system.
Buying or selling large amounts of cryptocurrencies is difficult. For example, if you try to buy 500 BTC, you will encounter a number of problems.
If you buy everything from an exchange, it is likely that no one is selling 500 BTC and then you will have to trade with several sellers. You can buy the first piece of the current market rate, but finish the last piece for a higher price.
In short terms, those who want to buy or sell quickly, and easily large amounts of cryptocurrencies use OTC.
Institutions, VCs, and high net worth funds investing in crypto markets can be isolated. Counter tables also usually negotiate with each other, when, for example, one table has a buyer a specific asset and another table has a seller.
Today, there are several tables operating on a global scale, trading billions of dollars a year - a reflection of how much this sector has grown since the bitcoin network was launched eleven years ago.
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