While the difference between exchanges and over-the-counter services is clear, choosing the best bitcoin OTC broker may be tricky. The sheer amount of questions is often overwhelming, ranging from simple ones like “Does bitcoin trade 24/7?” to nuances of fees involved. Here is a rundown of the benefits you should look for when choosing a partnership.

Lack of restrictions

As was already mentioned, many advantages of a bitcoin OTC service stem from large transaction amounts. For instance, most bitcoin brokers will have some sort of a lower limit, which may start somewhere in a $20, range and go as high as $, However, there is rarely, if ever, a restriction on the maximum amount on an over the counter transaction. In the same manner, the number of deals on BTC OTC exchanges will be limited only by the number of offers available to a bitcoin OTC broker. In simple terms, you can trade as much currency as you want as long as an OTC BTC dealer has enough matching offers in their book.
In all honesty, this benefit can also be a drawback in some scenarios. While an BTC OTC trader can place as large an offer as they can afford, there is no guarantee that a crypto broker will have a matching amount of bitcoin for sale because the books are kept private. In this light, only the best bitcoin platforms can turn the lack of restrictions into an advantage.

High level of security and transparency

The private nature of order books may create an impression that OTC BTC exchanges lack transparency, which is not entirely inaccurate. However, this is not to say that no bitcoin OTC broker dealer is trustworthy. A bitcoin brokerage firm is still a legitimate financial entity that is subject to state and international regulations. In other words, customers of an BTC OTC exchange will enjoy the same level of financial transparency as other trading services.
In the same way, the involvement of a BTC broker creates an impression of compromised security. This perception is not entirely unjustified – the OTC bitcoin market is still in the early stage of development, so not all bitcoin OTC brokers USA has committed to strict security standards. This doesn’t mean, however, that nobody is to be trusted – the best bitcoin broker, or even that in the top tier, will certainly be able to demonstrate what has been done to protect your funds and personal information.

High liquidity

If you have any familiarity with the domain of large-volume trading, you already know that liquidity is among the main barriers to profitable trading. Basically, the more currency you buy, the higher the chance the deal will affect the market. This is especially true for bitcoin deals because the price of the coin is far from settled. This is especially true for public exchanges where placing a big order will cause the price of crypto to skyrocket.
In the worst-case scenario, a major investor may spend more, buy less, and send the entire market into disarray. Fortunately, bitcoin private exchange has none of these issues. A typical OTC BTC deal occurs between the buyer and the seller directly, with only the broker serving as an intermediary. Such a setup protects an over the counter transaction from impacting the price of bitcoin. At the same time, the best bitcoin platform will have access to large amounts of currency and, as a result, will be able to close bitcoin deals within a matter of days.

The ability to buy cryptocurrencies for fiat directly

Bitcoin has come a long way since its creation and is now recognized in some form or another by most regulatory bodies worldwide. This does not mean, however, that it has become readily available for consumers. Counter-intuitively, this is in part due to the involvement of fiat in OTC transactions. For a web OTC system, it is already challenging to comply with regulations pertaining to either crypto or fiat, let alone both. As a result, the trader may come to what is described as the best website to trade bitcoin only to discover that it can only be traded for other cryptocurrencies.
In the case of an OTC BTC exchange, many services will focus on at least one popular fiat currency alongside one or more crypto coins. Almost every OTC bitcoin broker USA currently has, as well as over the counter options in other parts of the world will accept USD.

Cryptocurrency is sent to the wallet immediately

Another important difference between a traditional exchange and an bitcoin OTC broker is the way the funds are handled. On an exchange, the transactions are processed internally as long as the customer chooses not to withdraw them. This means you are not really in possession of coins that are displayed in your wallet – the exchange just states that you do. To actually take control of your cryptocurrency, you need to request a withdrawal and wait until it is completed.
In contrast, on an OTC trading platform, the deal happens directly between the buyer and the seller. This means that as soon as you reach an agreement, the funds on both sides are released. For fiat, the transaction may take some time due to legal procedures. Bitcoin, on the other hand, will arrive to your wallet within a matter of minutes. This makes OTC trading the best trading platform to trade cryptocurrency when it comes to speed and the level of control.

SFOX’s single integrated orderbook displays the aggregated orderbooks from many different major crypto exchanges and liquidity providers - including OTC providers.

Better prices when buying or selling

The best cryptocurrency prices available are often found in OTC venues. Previously only available to high net worth individuals, SFOX traders are now able to access OTC from the same orderbook that already gives them access to all major crypto exchanges.

More price transparency

OTC venues regularly source the best prices for cryptoassets and are generally more challenging to access than exchange prices. With OTC trading venues in the SFOX orderbook, OTC prices are displayed right alongside exchange prices to give you access to unique sources of liquidity.

Deeper liquidity and less slippage

Slippage refers to the difference between the price at which a trader expects a trade to execute and the price at which it actually executes. There are a number of reasons why slippage would occur — for instance, if a trader places a market order when the market is especially volatile, or when a trader places a trade large enough to move the market. With access to more liquidity, your largest orders run less risk of significantly moving the market.

Hidden order execution

Compared to exchange order books, OTC venue orders are not publicly visible to a large part of the crypto market. An order filled through an OTC venue will be hidden from the market at large, reducing the risk of your trade prompting a market response and incurring slippage.

Tips

• OTC trades do not appear in the Time and Sales summary section below the orderbook

Related links

OTC Trading Venue B2C2 Joins the SFOX Integrated Order Book

14 Bitcoin OTC brokers you need to know

How to Trade Cryptocurrency: A Glossary of Terms

How to Get Started On Crypto OTC Trading

If you’re exploring cryptocurrency markets, then you’ve come to the right place. Here at GSR, we’re creating a series of guides to nurture the next generation of cryptocurrency traders. We’re starting with Cryptocurrency OTC Trading.

You may have already heard about the over the counter trading of Bitcoins, but let’s start with the basics.

What is OTC trading?

You can enter financial markets either as a buyer or seller. And whether you’re a buyer or seller, you can trade on exchanges or with over the counter (OTC) trading desks.

Exchanges like the New York Stock Exchange or Nasdaq act as a negotiator between the buyers and sellers. Prices for the sale of assets (asks) and offers to buy (bids) are posted by traders. All trades happen publicly.

On the other hand, OTC is a trade between two parties with one usually being a ‘desk’. Technically, it is just another way of trading assets such as stocks, bonds, derivatives, and currencies.

With OTC, trading happens via a broker-dealer network, guaranteeing more privacy for traders. OTC trading also deals with larger volume transaction when compared to exchanges.

Which is better: OTC trading or an exchange?

If you’re deciding whether you’ll do the OTC or exchange route, here is a quick look at the pros and cons of each option.

OTC Pros

• Better for high-volume traders with a high net worth
• More privacy and anonymity
• No exchange risk

OTC Cons

• May have higher fees compared to exchanges
• Minimum order amounts

Exchange Pros

• Can be automated
• A better fit for small-scale investors
• More beneficial for those who want to actively trade price movements

Exchange Cons

• Slippage increases the cost
• Risk of hacking and theft
• Lower transaction rate because an order may take days to fill

Where does crypto OTC trading happen?

Crypto OTC trading happens in several platforms, which include:

• Trading firms – If you want personalized treatment, there are platforms you can use where you can reach out to traders who specialize in large transactions. They avoid slippage by having access to large sources of cryptocurrency liquidity.
• Chat rooms – The first large OTC trade of bitcoin happened on the #bitcoin-otc chatroom. This is now less prevalent but still happens to this day because there are chat rooms that allow peer-to-peer transactions.
• Dark pools – These pools are private non public exchanges that are not accessible to the wider public market. These non transparent markets have no order book and allow large investors to trade with each other independently.

When do you use crypto OTC trading instead of crypto exchanges?

Traders who use OTC prefer it over exchanges because of the privacy and high liquidity. If you do trade large amounts on exchanges, you could make an impact on the market. If you use an OTC trading desk, since the transaction is direct between two parties, it will not show up in an exchange order book. You also have a better chance of your order being filled in one go at the price you want. In an OTC transaction you are dealing with one counterparty on the other side of the trade, on an exchange there are hundreds if not thousands of traders on the other side, all of whom have a different perspectives and preferences on price.

If you place an order of high volume on an exchange the market could move against you, preventing you from getting the best price for your asset and greatly jeopardising the trades efficiency.

How much money do I need to start crypto OTC trading?

“Is there a required amount for OTC?” and “Am I going to be rejected for wanting to start crypto OTC trading if I don’t have enough capital?” These are some common questions from new entrants in the market.

According to CoinTelegraph, there are desks that only allow transactions larger than 20 BTC (around $, as of September ) and others who require their investors to trade the equivalent of at least $, or more. However, for some smaller desks, you only need 10 Bitcoins ($, as of August ) to start OTC trading.

How do I trade crypto like bitcoin over the counter?

Here’s a step-by-step guide on how to do OTC trading:

Step 1: Find an OTC brokering platform 

Make sure to find a reputable OTC trading desk. You can search online, or also ask for recommendations from people you trust. If they have a website, make sure to check their team and backgrounds so you can take a look at their credentials.

Step 2: Decide your terms

Specify what type of cryptocurrency, how much you want to buy, when you want the trade to take place, and your desired price.

Step 3: Agree to a price 

The counterpart will respond with their own price and you can negotiate. Once you both have agreed on a price, the value can be transferred. During this stage, a KYC (Know Your Customer) due diligence may also be performed by the desk and relevant parties.

Crypto OTC Trading FAQs

Now we’ll answer frequently asked questions about cryptocurrencies like Bitcoin.

How much Bitcoin can you buy at once?

Bitcoin is currently trading just under $50,, you can buy as many Bitcoins as your investment budget can afford. However it is also possible to buy a fraction of a Bitcoin. Technically, you can buy as little as one hundredth million of a Bitcoin ( BTC, or 1 satoshi) but exchanges will usually have a minimum of $5-$10 per transaction.

Is Bitcoin a good investment?

Bitcoin was coined the investment of the decade in late Its return on $ was 9,,% beating Amazon at 3,% and Apple at 2,%.

It appears Bitcoin is being more seriously considered as a speculative hedge to long term inflation, and general macro uncertainty. Reputable commentary from traditional investors has increased since renowned hedge fund manager Paul Tudor Jones stated that 2% of his portfolio is currently in Bitcoin, declaring it a ‘great speculative investment.’ Publicly traded company Microstrategy has also invested over $1 billion in Bitcoin. The car manufacturer Tesla recently disclosed they invested $ billion in Bitcoin.

Should I buy Bitcoin over gold?

Market commentators have long compared Bitcoin to ‘digital gold’. Gold in traditional markets has been a safe haven asset and hedge to inflation for decades. Some advantages Bitcoin has over Gold is that its supply is fixed, its is far more portable, and its highly liquid market trades 24/7.

How do I get started on bitcoin OTC trading?

You can start right here. At www.oldyorkcellars.com, we offer you deep liquidity and unrivalled prices.

Our competitive advantage is our Smart Order Execution that finds liquidity and prices across a wide range of market participants and exchanges from over 50 countries. Aside from 24/7/ service trading, we trade crosses of digital assets and we are connected to the industry’s leading custodians. By trading with us, you will gain access to our global banking network.

Read more about our OTC trading services here.

Reports, market insights, and other information (“Information”) provided by GSR or its affiliates have been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof. Information provided is not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other related services and is not a recommendation to buy, sell, or hold any asset. Information is based on sources considered to be reliable, but not guaranteed to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of the date of publication, and are subject to change without notice. Trading and investing in digital assets involves significant risks including price volatility and illiquidity and may not be suitable for all investors. GSR will not be liable whatsoever for any direct or consequential loss arising from the use of this Information. Copyright of this Information belongs to GSR. Neither this Information nor any copy thereof may be taken or rented or redistributed, directly or indirectly, without prior written permission of GSR. Not a solicitation to U.S. Entities or individuals for securities in any form.  If you are such an entity, you must close this page. Trading from Singapore, please review The Monetary Authority of Singapore (MAS) compliance note.