WHAT IS OTC TRADING AND HOW DOES IT WORK?

At our Private Trading Desk, we offer OTC (Over-the-Counter) trading. The term “OTC” might sound complex, but it’s actually quite simple. Here’s how it works.

In short

OTC trading

• is a way to buy or sell crypto outside of a regular exchange, for example through a specialized desk or broker.

• is ideal for companies and high-net-worth individuals who want to trade large amounts without their orders affecting the market price.

• offers advantages such as privacy, stable pricing, and access to deeper liquidity.

An OTC desk is not an exchange in the traditional sense but allows large transactions to take place outside the public market. You’ll also receive personal guidance and service tailored to your needs.

1. What Is OTC Trading?

OTC trading (Over-the-Counter) means that large transactions take place directly between buyer and seller, without using a public crypto exchange. In practice, this is done through a broker or OTC desk that facilitates the trade and ensures a smooth process.

The main difference from a regular exchange:
In OTC trading, orders are not visible in a public order book. This keeps details like price and quantity private between the parties involved, preventing your transaction from moving the market price.

In short, OTC trading is designed for large trades that require discretion, stability, and personal service.

2. What Is the Difference Between OTC Trading and Regular Exchange Trading?

On exchanges, buy and sell orders are posted publicly, which means large trades can immediately affect the market price.

In OTC trading, buyers and sellers negotiate prices privately, so the market is not influenced by large orders.

The main difference lies in where and how the trading takes place.

• Regular Exchange Trading:
  In regular exchange trading, all transactions are carried out through a central platform with a public order book (see image). Everyone can see the buy and sell orders listed there. This ensures transparency and price formation in the market, where prices are determined by the visible interaction of supply and demand.

• OTC Trading:
  

  In OTC trading, transactions take place outside the exchange, usually through a broker or OTC desk. Two parties negotiate directly on the price and amount, without the market being immediately aware of the trade.

  The advantage is that a large order does not directly affect the open market price. This allows major trades to be executed without alerting the market or causing price movements.
  
  

3. Who Is OTC Trading For?

OTC trading is designed for individuals and organizations that want to trade large amounts of crypto without affecting the market price.

It is often used by companies, financial institutions, and high-net-worth individuals who want to buy or sell large volumes in a single transaction. On a regular exchange, such an order could move the price significantly or be only partially filled, leading to price differences (known as slippage).

Many clients also choose OTC trading for its personal service. You have direct contact with an account manager who guides you through the entire process.

In short, OTC trading is for clients who want to execute large transactions (starting from €50,000) with complete discretion, deep liquidity, personal support, and efficient execution.

4. What Are the Advantages of OTC Trading?

OTC trading offers several advantages compared to trading on regular exchanges, especially when executing large transactions.

• No immediate price impact (less slippage)

When making a large purchase or sale through an OTC desk, the transaction is not made public immediately, which means the market price does not change directly because of your order.
In essence, you agree on a fixed price for the entire order. This allows you to trade large amounts of crypto without pushing the price up (when buying) or down (when selling) due to your own transaction.
It ensures more stable prices for the party executing the trade.

• Deep liquidity through network

Large OTC desks often use a broad network of liquidity sources. They quote prices based on multiple exchanges and external liquidity providers, so you as a client receive the best possible price.

In other words, the broker searches for the best available rate for the amount you wish to trade by sourcing liquidity across various markets. This can result in better prices than you would obtain on a single exchange, especially for larger orders.

• Personal service

OTC trading provides a personal level of service, where experienced account managers assist clients with their trades. Instead of trading on a screen yourself, you can discuss your order by phone, and it will be executed immediately.

5. How Does an OTC Transaction Work at BTC Direct?

An OTC transaction at BTC Direct generally follows the steps below.

1. Contact and request
   

   You contact one of BTC Direct’s account managers by phone and indicate how much crypto you would like to buy or sell.

   For example: “I would like to purchase €100,000 worth of bitcoin” or “I want to sell 1 bitcoin.”
   
   
   

2. Quotation (Quoting) 
   

   While on the phone, we initiate the requested transaction through our OTC desk.

   1. We request a quote for the desired amount.

   2. We calculate our fee.

   3. We communicate the final price (including the fee) to you.

   
   
   

3. Execution and settlement
   
   

   Once you give verbal approval for the quoted price, the transaction is executed.
   At this point, the price is locked in and the agreement becomes binding.

   You will then receive an invoice by email containing all transaction details: the amount, the price, the wallet address for crypto, the bank account for fiat, and so on.

   After that, you transfer the euros or coins to us. Once we have received the payment, we deliver the euros or coins to you. This usually takes place within one business day.

In practice, the process is more personal and flexible than on an exchange. You are in direct contact with us and can make adjustments during the process if needed. We execute the order on your behalf and lock in the price immediately.

This is an important difference:

• On an exchange, you place an order and let the automated matching system execute the trade.
• In OTC trading, there is a personal element that ensures large orders are executed smoothly and with minimal risk.
  
  

In summary

OTC trading is a discreet and efficient way to trade, specifically designed for large transactions. It offers key advantages such as privacy, stable pricing, and access to deep liquidity.

With personal guidance and greater control over the process, OTC trading is the ideal solution for institutional investors and high-net-worth individuals who want to trade large amounts of crypto without impacting the market.