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More than $17 billion of institutional capital flowed into the digital asset space in 2021 alone — evidence that high-income investors, family offices, hedge funds and money managers are looking at crypto as a portfolio diversification strategy. But how do these premium investors make their big trades and what is the best way for other new idealists looking to invest in cryptocurrencies?
Understanding OTC Trading
Financial trading usually takes place on stock exchanges or through Over-The-Counter [OTC]. Third party exchanges negotiate prices between buyers and sellers and facilitate deals.
But when using OTC trading desks, trading takes place directly between the parties, bypassing the central and standard exchanges and traditional business hours. In addition, OTC trading is conducted electronically via voice and without a physical location. All of these aspects provide investors with confidentiality and access to liquidity outside the traditional market. OTC trading also removes inflexible regulatory layers that can get in the way of exceptionally large trades.
Why OTC Digital Assets for the Rich
Unlike exchanges, OTC trading is not recorded or executed on any official exchange. The OTC offers price guarantee and reduces transaction risk against price deterioration or market impact. Combined with lower counterparty risk and instant liquidity of funds, investors get a safe, anonymous and fast way to perform large trades.
In digital assets, placing orders through a reliable off-exchange based company can make the difference between profitable and mediocre trade. For example, high-volume KYC or HNI compliant companies can place OTC orders on the WazirX OTC Desk with a minimum order value of $50,000 or equivalent when placing a trade order. On the other hand, in a traditional exchange, a trader may face a slippage loss due to the size of the order which may adversely affect the exchange rates. But at WazirX OTC, OTC trading takes place in three popular pairs: BTC/INR, USDT/INR, and ETH/INR with guaranteed deep liquidity, frictionless access to digital assets, industry-leading security, single price execution for large trading orders with price locking and pre-settlement after trading.
OTC trading in the cryptocurrency market has the same foundations as traditional OTC trading outside of other financial exchanges. But its economic importance to the crypto market is exceptionally higher than that of centralized platforms. In the world of digital assets, OTC orders embody the largest and unknown share of the entire cryptocurrency trading volume.
Why Use OTC Cryptocurrency Desk via Exchange
Institutional investors find it attractive to conduct OTC trades as they can make particularly large transactions with minimal price slippage. While there are no official figures given the private nature of the OTC market, anecdotal suggestions reveal that the OTC cryptocurrency market is seeing two to three times the volume of trading that crypto exchanges process daily.
The OTC trading desk offers advantages unparalleled over a standard exchange. For example, when conducting an OTC crypto trade, the investor has full ownership of his or her assets throughout the entire transaction. Trades are made instantly to and from the investor’s personal crypto wallet. On the other hand, when using a standard exchange, crypto assets lie in the custody of the exchange. Some HNI view this as a security risk.
There are many additional benefits to using an OTC trading desk. It provides:
Verified High Net worth Traders. All scams are eliminated because the traders are KYC compliant.
Absolute confidentiality and anonymity. OTC trading desks ensure fast, private and secure trading of digital assets
Low price slip. Investors can buy and sell large digital assets and avoid price slippage.
Complete and comprehensive security and high liquidity without limits for trading. There are no limits for trading, thus enabling important transactions with high liquidity. The OTC desk offers a secure trading platform for high net-worth and high-volume investors.
Constant availability. There is always a network of buyers and sellers willing to trade digital assets at different prices and quantities.
low risk. With a large number of traders and an extensive network of traders, the risk is low, which saves time and expenses for investors.
OTC Crypto Desks: Where Billions Move Discreetly
OTC trading provides absolute anonymity unlike centralized exchanges. In a typical exchange there is a large demand in the exchange order books with counterparty risk and forward risk. But with OTC trading, since orders are really anonymous, important investors are not revealed as clients.
And since it provides anonymity, high net worth investors have the opportunity to pursue investments in digital assets without announcing their applications unless they broadcast them themselves. not so long ago, Michael C. SaylorThe CEO of MicroStrategy announced the company’s acquisition of 21,454 Bitcoins and an additional investment of $175 million in Bitcoin, increasing their holdings to $425 million. However, until the CEO announced the details, this data was not accessible to the public. This shows how OTC cryptocurrency trading maintains an impermeable trading system with unclear transactions, no matter how much is being traded.
Wealthy and institutional investors prefer discreet, subtlety, and best price performance. OTC trading desks offer these advantages and more with the added advantage of no exchange limits affecting order size when dealing with professional OTC counterparties. High net worth individuals can find solid grounding for trading through WazirX OTC due to its instant liquidity provisions and execution on remarkably large blocks.
OTC offices will play an important role in creating the emerging digital asset classes among the mature ecosystem. In fact, trading volumes exceeded $552 billion in the United States, which is more than the total volume of 2020, which reveals its growing popularity. With the high liquidity of the cryptocurrency markets, OTC trading is likely to increase institutional participation and drive investment decisions.
When choosing an OTC, the user experience is paramount, as well as the transaction speed and cryptocurrency pair. With WazirX OTC, investors benefit from a reputable and trusted OTC trading desk with competitive rates, extremely fast trading and near-instant speeds for blockchain transactions.