Cryptocurrency Over-The-Counter (OTC) Markets And Their Effect On The Price Of Crypto

If you are new to the term “over-the-counter”, you are not the only one out there. For many, this phrase usually creates images of easy access to medication. However, in the crypto space, over-the-counter or OTC markets are the ones that offer easy access to transactions of cryptocurrencies.

At Espay, we stand as an official intermediary that provides OTC services for various cryptocurrencies, ensuring smooth transactions for each one of our clients. Below, we are highlighting the value of the OTC markets and showing how they affect the price of cryptocurrencies.

An Overview Of The Daily Crypto OTC Market

Every day, there are billions of crypto assets being traded in the crypto markets between various investors. Obviously, big money is involved in a decent part of this transactions, which brought the need for over-the-counter markets as ones where investors with deep pockets (high net-worth individuals, crypto funds, early adopters etc.) buy and sell cryptocurrencies like Bitcoin.

The large trades on this market are what directly moves the prices in the liquid state of the market – which is again why large investors prefer to trade away from the eyes of exchanges. On average, the ticket (transaction) sizes of OTC Bitcoin trades start between $75,000 to $250,000 but can sometimes to even in the million margins. A more recent estimate from March of this year put the volume of Bitcoin traded via OTC at around $20 Billion per day.

As such, the OTC markets are carried out through established brokers such as Genesis Trading, which handles between $75 million and $80 million per day, according to Reuters. Because of that, cryptocurrency OTC trading is seen as a market that has double or triple the size of the daily trading volumes on exchanges.

Other well-established and respected OTC brokers include the names of CircleTrade, Cumberland, itBit, BitStocks, JumpTrading and IBCGroup. Unfortunately, these brokers only deal with traders that are high in terms of net worth.

But before you do that, let us educate you further on the importance of OTC markets and their real effect on the price of Bitcoin…

(How) Does The OTC Market Affect The Price Of Bitcoin?

Since OTC trades happen far away from exchanges, they should – in theory – not actually affect the price of Bitcoin and other altcoins at all. However, if there is a large buyer or seller that is making inquiries in the OTC market, the “word” about it usually spreads like wildfire which leads the exchanges to tweaking their prices.

For example, if one early Bitcoin investor wants to cash out some of their 10,000 BTC in holdings (worth around $65 million in today’s market) and asks an OTC broker for a suitable bid, the Bitcoin investors who are active in the OTC market and on exchanges could also end up selling BTC on exchanges in anticipation of the large trade that will push the prices lower.

A great example for this was the Mt. Gox case in which more than 35,000 BTC was sold between December 2017 and February 2018, hugely affecting the price of Bitcoin (which fell by more than 70% in a couple of months).

So, it is safe to say that the OTC market can be a great source of information for investors – as well as a great reference point and an indicator on the actual route of the price of Bitcoin Since exchanges mainly service retail traders, everyone could argue that the “real” price of Bitcoin is found on the OTC market where large investors are crossing trades and therefore stabilizing or destabilizing it.

So, How Do You Make Money With OTC Trading?

At this point, you are probably wondering about getting the best value from this article – and making most of your OTC market trades.

The good news is that even if you are far from a high net worth investor, you can benefit from (knowing) the OTC market and the current situation of it. With a technique called arbitrage trading, you can sell crypto in one location and sell or buy it back in another one to secure a profit.

However, the most important move that you should play is to have a reliable platform for OTC trading and monitor all the exchange feeds, all in order to get a general idea of how prices are trading.

From Trading To Escrow, Espay Has Got You Covered

As we mentioned earlier, our crypto trading services are tailored to the needs of every individual. In that manner, you can earn profits from trading crypto pairs after monitoring the activities of our experts on well-known exchanges such as Poloniex, BTC-E, Bitfinex, Bitstamp and others.

In a nutshell, you could be following the same investments that our highly skilled traders are making on different platforms.

In the meantime, you can rest assured that your investment is safe thanks to our Escrow services which reassure you that you are protected against diverse title claims. For more information on our Escrow services.

Lastly, our Bitcoin Cloud Mining services can also help you – especially if you want to learn more about the world of Bitcoin mining without having to worry about all the technicalities such as network difficulties, hash rates etc.