WHAT IS AN OTC DESK?
WHO ARE THEY?
Are they manipulating Bitcoins price?
Institutional investors, hedge funds, large investors, high net worth individuals, pensions, etc use them to buy/sell large quantities of assets, such as Bitcoin (think ‘1,000 BTC’, ‘$100 million’ buy/sells +).
Why do they use them? — They typically use an Over-The-Counter ‘OTC’ Desk to make large purchases when using an exchange or brokerage is not possible due to lack of available assets to trade, or when a trade of the size they want to make would have an impact on the assets market price during their purchase.
Another reason — Using an OTC Desk also enables the large purchase without alerting the market openly through the order books as to the traders intentions. AKA it offers ‘transactional privacy.’
• OTC Desks are matchmakers for buyers with sellers (acting as a ‘dealer’).
• OTC Desk trades can be crypto-to-crypto or fiat-to-crypto, etc.
• OTC Desks make money off of the ‘spread’ (the difference between the price they obtain and sell the asset at, or v.v.)
• Some OTC Desks handle $1,000,000,000 in trades DAILY!
• OTC Desks are not typically involved in methods of price manipulation. The OTC Desks make money off spreads, and sometimes they may take a loss when facilitating a trade. Periods of high OTC Desk usage/actions (think MSTR buying a billion bucks!) can often keep the price in a range, stabilizing the price. There’s a lot going on behind the scenes, but the goal of an OTC Desk is to make a small profit off being a dealer between parties.
• You can use an OTC desk too! However, if you’re just buying a few hundred or few thousand dollars here and there, it’s often easier to just buy on an exchange or brokerage. Also, some OTC Desks have minimums they do business at, such as $100,000 or $1,000,000 trade minimums).
What are some examples of commonly used Bitcoin OTC Desks?
- Binance OTC (@binance)
- Kraken OTC (@krakenpro)
- Coinbase Prime OTC (@CoinbaseInsto)
- Gemini OTC (@Gemini)
- Galaxy Digital Services OTC (@GalaxyDigital)
- Strike Private OTC (@Strike)
- River Private Client (@River)
- SFOX (@SFox)
- Octagon Strategy (@OctagonStrategy)
- Genesis Trading (@GenesisTrading)
- Circle (@circle)
- itBit OTC (@itBit)
- B2C2
- XBTO (@xbtogroup)
- there are many, many more
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