How to Close Deals with Big Amounts of Cryptocurrency
The exponential growth of the cryptocurrency market in recent years has attracted the attention of big players in the financial market. However, despite its recognition throughout the world, the bitcoin market remains in the early stage of its development, which places noticeable restrictions on large-scale deals.
Buying bitcoin in bulk on exchanges still entails the risk of price slippage, not to mention the possibility of crashing the market. In addition, many exchanges just don’t have sufficient liquidity to satisfy the demand generated by major investors. Because of these limitations, many players consider the option of the over-the-counter (OTC) platforms – services that connect buyers and sellers directly.
Big Crypto Transactions Discussion
For a long time, sending large amounts of funds has always been associated with immense hurdles. First off, the participants should have been ready to spend a hefty proportion of their money on fees taken by institutions participating in the transaction. In addition, the time for the funds to arrive was unbearably slow, taking weeks and, in some cases, months.
Finally, once you sent your money, you had virtually no control over the process, knowing only that it is there somewhere… probably. Fortunately, a lot of this has ended with the arrival of digital assets, with cryptocurrency being the biggest game-changer.
In the case of bitcoin, the most popular cryptocurrency, fees are virtually non-existent, often taking as little as one-millionth of a percent of the transaction cost even for volumes valued at millions of dollars. At the same time, the bitcoin transaction time is lightning-speed fast, taking several minutes to maybe an hour on a particularly unlucky day.
On top of that, the entire process is absolutely transparent, with participants having full access to all necessary information at all times. With these advantages on hand, there is little wonder that bitcoin is becoming a go-to method for large transactions.
The Largest Crypto Transaction in History
The speed, cost, and transparency of the bitcoin blockchain make it possible for people to send massive amounts of wealth in cryptocurrency safely and discretely. Perhaps the most famous example is the purchase of two pizzas for 10,000 bitcoins, which is widely recognized as the first bitcoin transaction recognized by a commercial vendor. This landmark bitcoin transaction, which was worth $30 in 2010, would amount to a staggering $83 million under the current bitcoin price.
However, even it pails in comparison with the largest transactions recorded in the blockchain the following year. November 16th of 2011 saw a transaction of 500,000 bitcoins, with most of those coins going to a single bitcoin address. It should be noted that at the time of the transaction, the bitcoin value was around two dollars, so the transaction that would be worth over 4 billion today was just over a million USD at the time.
Nevertheless, several recent transactions superseded even these impressive records. For instance, 2019 alone saw several transactions ranging from 120,000 to 150,000 bitcoin, all of which surpassed $1 billion. Astonishingly, thanks to the incredibly low bitcoin transaction fees, the biggest of these deals cost its owner just over $100 – a laughably minuscule sum compared to those traditional banking institutions would charge for the same operation.
Since there is no way to tell who was behind the largest bitcoin transaction in history, it is a little terrifying knowing that this amount of wealth is enough to crash the entire market, which did happen in the past. Nevertheless, it shows the tremendous potential offered by cryptocurrency technology.
Who Are The Deal Participants?
As is common with cryptocurrencies, the identity of the actors behind the transaction is unknown. It is possible to trace the entire way of the bitcoins across the blockchain, but it is never clear who owns which address. Such transparency allows analyzing the origin of funds in some cases, but only to a limited degree.
For instance, the analysis of the recent transaction of 150,000 coins has revealed that a considerable proportion of funds was linked to addresses associated with one of the major cryptocurrency exchanges, Huobi. However, even this result is up to debate, with the representatives of the exchange being reluctant to confirm the validity of the claim.
While many such deals undoubtedly come from exchanges, this is not always the case. In fact, several other explanations have been proposed on the most likely participants. The most convincing one is cryptocurrency whales. The meteoric rise of bitcoin value in recent years understandably attracts market players with capital, so it is reasonable to expect that at least some large transactions are made by such accounts.
Other possible candidates are early adopters – people who own large quantities of cryptocurrency from the time when the bitcoin price was around several cents. However, it is not very likely that someone just needed to move its billion worth of bitcoin. Moreover, as the market matures, it becomes more difficult to manipulate it by cashing out large sums of bitcoin to USD, which means that exchanges are by far the most probable actors.
Pitfalls of Big Crypto Volumes Trading
Despite the advantages of blockchain technology, the trading of big volumes is still subject to certain restrictions. The most apparent one is the volume of cryptocurrency available on the platform. While the exponential growth of bitcoin value prompted the emergence of numerous exchanges, the majority of them do not have large volumes of coins.
Because of this, those looking to buy bitcoin in bulk may be hard-pressed to find the platform with a sufficient amount. What’s more, despite all the progress, it is still relatively easy to crash the market or, at the very least, make a sizable dent in bitcoin price. In the case of million-dollar deals, even a five percent drop would aggregate to considerable losses. Finally, exchanges do not offer sufficient discretion, which is crucial for large transactions. After all, you would want all the anonymity you can get when going for a million-dollar deal.
OTC Trading – Best Way for Crypto Deals
Due to these limitations, large-scale investors and market players turn to OTC brokers. The most apparent advantage offered by OTC trading is the volume: OTC brokers usually have sufficient liquidity to cover even the largest orders. At the same time, such deals do not entail the risk of price slippage, allowing buying bitcoin in any amount without crashing its price.
Besides, OTC platforms have an important price protection measure – they do not display the order depth to all members, which solves the issue of bitcoin price fluctuation. Finally, unlike most exchanges, OTC brokers do not impose limitations on bitcoin to USD transactions, putting the clients in control of deals. Finally, OTC trading does not disclose its operations, which is particularly useful when you prefer your deals discrete. To sum up, OTC platforms are a go-to option for trading large volumes of bitcoin.