• Do you want to buy a large volume of Bitcoin?
  • Do you want to sell a lot of Bitcoin?

Read on.. as this is going to be interesting.

As we all know, there are more ways than one to buy Bitcoins and other cryptocurrencies.

Popular options are buying the cryptocurrencies using cryptocurrency exchanges like Binance, KuCoin, BiBox etc. But there is one more way, not as popular and feasible though.

Wondering why so?

Well, we’ll get to it later, but this new way is called Over-The-Counter (OTC) trade of Bitcoin.

What Is Bitcoin OTC?

For those of you who aren’t familiar with the term OTC, here is a simple Wikipedia description of the same:

Over-the-counter (OTC) or off-exchange trading is done directly between two parties, without the supervision of an exchange. It is contrasted with crypto exchange trading, which occurs via exchanges. A crypto exchange has the benefit of facilitating liquidity, providing transparency, and maintaining the current market price. In an OTC trade, the price is not necessarily published for the public. OTC trading, as well as exchange trading, occurs with commodities, financial instruments (including stocks), and derivatives of such products. 

In the realm of cryptocurrencies too, Bitcoin and other popular cryptocurrencies are traded over the counter where only two parties are involved.

But this option isn’t for everyone.

By everyone I mean the small retail investors.

To use the OTC trade for Bitcoin, one needs to be a High Net Worth Individual (HNI) or an institution which is willing to buy/sell BTC in huge volumes (at least $100,000 or more).

There are special purpose OTC exchanges or brokers from where one can execute an OTC trade for cryptocurrencies.

Why Crypto OTC? What are the benefits?

OTC trades, in general, are carried out so that one can buy/sell a stock, commodity or crypto asset quickly without moving the market much.

Let us say you want to buy 500 BTC ($3,173,810) on Binance and you placed an order. But it has the liquidity of only 250 BTC. What happens then? Any guesses? (Assumption: there are 250BTC available in your buy price range)

Well, your order will be filled partially, plus your order will decrease the supply of BTC on the Binance market and therefore the price will naturally move high.

Also, your order is not filled in your price range and the price has increased which is counter-intuitive to you.

The same scenario can happen when you try to sell 500 BTC incurring significant losses if the market price goes way beyond what you quoted for. In that case, you would need to HODL or just sell it for a lower price range because your huge order has moved the market.

And when stocks market, a very huge market with liquidity follows OTC trades for HNIs and Institutions then why not for the crypto market which is so small in comparison to other markets

Crypto market is very minuscule as compared to the world’s financial markets. To put into perspective look at this chart to understand where the crypto market stands:

Crypto market Size

So it is much likely that this kind of market will be moved with a million or two dollars that’s why OTCs are must have here.

Best Bitcoin OTC brokers: Buy large quantities of Bitcoin Through OTC

As I shared with you previously, Bitcoin OTC is not for everyone and honestly, it is not a child’s play.

Not only you need to be HNI or Institution which is willing to deal in OTC but one needs to be highly experienced to execute such a trade. If you are not, the brokers or OTC platform that you use will outplay you to make higher profits.

After all, trading is a zero-sum game. You win some, you lose some.

That’s why there is a lot of skill that goes in while executing OTC trades. We will discuss those later but for now here are some of the services/brokers that HNIs and Institutions can use right now for executing BTC OTC trades:

1. Kraken OTC exchange:

Kraken is one highly reputed OTC broker that facilitates OTC trading.  You need a verified account on Kraken to use the OTC feature. 

As of 2020, here is the outline of the Kraken OTC trading feature:

Requirements:
1. Possess Pro (formerly Tier 4) verified Kraken Account.
2. We always second settle.
3. Bank wires must always match the Kraken Account name.
4. USD 100k minimum trades.


Process:
- We set up chat on Whatsapp (preferred for security reasons
but can accommodate Skype or Telegram) with all the traders.
- There you may ask for live quotes.
- If you agree with price, you say "done" and we confirm with "done". If
you disagree, "pass" to decline and ask for refresh when ready.
- If done, we will send an email confirmation. You reply all with "done"
along with your crypto address or bank wire information.
- Once replied we submit to back office to initiate settlement.
Completion of settlement may take 2-24 hours depending on the time of
day trade is executed.


Pricing:
- There are no discounts, we will always bid below and offer above
market. However, the quotes will generally be inside the spread of the order book.
- There are no fees, prices quoted are all-in.
- We are able to trade pairs listed on the exchange.
- Small ticket fees of 1.5% and 1% apply to trades between USD 10-50k
and 51-99k respectively.

Funding:
- We are able to send and receive USD wires globally but EUR funding
goes through the Kraken exchange interface as usual.
- Initially your trades must be pre-funded. I.e. they must be in your
Kraken account or you must have sent them to the OTC account. Once we
have trades under our belts and have built a relationship, we can
discuss daily settlement.
  1. Huobi: Available pairs BTC, ETH, USDT, EOS, HT
  2. OTCBTC: Available pairs BTC, ETH, LTC, EOS, BCH, NEO, QTUM, ZEC, USDT and more
  3. HiveEXAvailable pairs BTC, ETH, XRP ($200,000 to $10 Million)
  4. itBitAvailable pairs BTC, ETH, LTC, BCH, XLM Minimum order size of $100K (or equivalent)

Since 2019, more players have emerged in this space as cryptocurrencies have really taken off in the last year and a half.

But just knowing these services isn’t enough as you need to go through a thorough KYC check to be considered seriously.

Some more important points to remember if you trade Bitcoin on OTC…

  • When you want to do an OTC trade do not do window shopping from brokers 1-2 days before the actual date of the trade. Instead, start before a week or so, so that the information that you gave to them isn’t much worthwhile to impact the market on the day of your actual trade.
  • Always ask for both buy/sell prices when indulging in an OTC trade so that it is harder for the broker to front run you.
  • Don’t let your broker take advantage of your behavioral patterns and don’t inquire about crypto at fixed date and time. Instead, be unpredictable and random.
  • Do OTC trading in a slow market instead of a volatile market.
  • Do not buy/sell the whole target amount of BTC you want to trade.

Conclusion: Over The Counter Crypto Trading

Over the counter, trading isn’t transparent as much as trading on centralized exchanges. That’s why I have listed some of the DOs and DONT’s in the above section.

But if you are someone who is planning to buy crypto worth of $100,000 from crypto exchanges then this can be detrimental for you, if not done properly.

So instead, you take the pains of learning the basics of OTC trades and then try to make a trade with the DOs and DONT’s we have shared with you.

What about money laundering and criminal activity with OTC trading?

This is a legit risk, and the only way to counter this issue is by working with only those crypto OTC brokers who do proper KYC, and due diligence from both buyer and seller.

Will OTC brokers accept cash?

In many jurisdictions, OTC broker does accept cash. However, you may be asked to produce proof of funds.

Is Bitcoin OTC in China & Hong Kong legal?

As Chinese government has banned cryptocurrency exchanges, OTC brokers have been the driving force of crypto buying/selling in China.

Now let us know: What do you think about BTC OTC trades? Have you done this type of trade before? Do you know any more services that provide OTC trade service for cryptocurrencies? Let us know in the comments section below 🙂

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