Impact of OTC Trading on Bitcoin Price
The market of cryptocurrency has been dramatically rising each day for the last several years. Only a decade ago, it was challenging to believe in the success of digital money, but nowadays, it is one of the most profitable and promising spheres for business. More and more people decide to invest in bitcoin each day.
As the cryptocurrency market is developing, there have already occurred two separate methods of its trading. The first one is through crypto exchanges, which are similar to those famous stock exchanges. And the second one is over-the-counter or simply crypto otc trading. This method has already become noticeably influential, so it is important to understand how it affects the overall crypto market. While, in theory, OTC does not have to impact on the price of BTC at all, there still are some nuances. Stay tuned and learn how over-the-counter (otc) crypto trading service influences the price of bitcoin.
Privacy of OTC Transactions
OTC transactions offer a vivid variety of advantages to those who are eager to use them. One of them is anonymity, which means that both buyer and seller discuss the details of the transaction directly between themselves.
Trading on crypto exchange is quite different: just like with financial stock exchanges, there are exchange order books so that the aspects of each transaction can be accessed by other people. Thus, each transaction through crypto exchange affects the market in general, causing the rise of the price of a cryptocurrency or its fall. While this option makes crypto exchanges affecting the whole crypto market, it also creates some issues when transferring big amounts of BTC.
Buying or selling otc bitcoin, the one does not affect the overall market. The price of bitcoin on the otc exchange usually depends on the current exchange rate: in all the cases, the price is discussed directly by the two parties of the transaction. It is extremely convenient for those who don’t want to affect market sentiments. It is also useful for “whales” – crypto traders with noticeable holdings, who don’t want to trade in public. Even if you are not a “whale,” privacy is one of the key benefits of the otc BTC trade, which will make the process more convenient for you.
How are OTC Trades Executed?
Another important aspect of understanding how exactly the OTC market works is the knowledge of how the OTC BTC trades are executed. A transaction can be executed between two parties without others being aware of the price at which it was completed. Thus, to complete the trades successfully, you need to know how exactly they are executed.
There are two parties in the deal. One is you, the buyer, and another one is the seller. In most otc desk bitcoin, the buyers and sellers do not communicate directly with each other. As another party, you will be introduced to a bitcoin OTC trader. The trader will ease your pain and help you with the challenging process of making a deal. Your headache ends when you ask for a needed amount of bitcoin and agree on an offered price. As soon as you do, the trade will find a seller willing to make the deal, and you will get your digital money. Thus, the process of otc trades is easy: you will communicate with a trader only, discussing the price of the deal, and that’s actually all. Wow!
Bitcoin OTC Transaction Process
You might be interested in detailed instruction on the topic, and we are ready to provide it for you. This will be really useful for those who are newbies in OTC crypto trading. From the perspective of a buyer, bitcoin OTC trade has the next steps:
- Finding the best website to buy bitcoins or sell bitcoins. Choose from the most widely known ones: they are safe and provide a great service.
- Creation of the account. Yeah, just like with social media: you have to put on all the needed private info to create your account on the chosen platform.
- Verification. Since BTC trading involves the operations with really big assets, the OTC exchange will ask your documents, such as Proof of Income, Government ID, Proof of Residence, etc. Be ready to provide these and other similar documents beforehand.
- Communication. As you are ready, simply ask for a needed amount of bitcoin. For example, you can type something like, “I would like to buy 150 Bitcoin.” And that’s actually all you should do. The trader will reach you and offer the price depending on the current market. They would also contact the available sellers and make a deal with them, just like with you. Thus, the trader always acts as another party in crypto otc deals.
- Confirmation. Whether you agree on the offered price (it is usually reasonable), the trader will ask for your deposit address.
- Payment. You will also receive a message with instructions on how to pay for the assets.
- Completing the trade. When you pay, the trader will complete the transaction and send the needed amount of BTC on your deposit. Easy-peasy!
As you see, nothing challenging. OTC trading is much more convenient than regular crypto exchange trading because you don’t actually need to do anything – just ask for a needed sum and wait. Working with an exchange, you need to keep a lot of aspects in mind, and this often can be exhausting.
How Do OTC Markets Affect the Price of Bitcoin?
In theory, as OTC BTC markets do not declare the outcomes of the transactions to the third parties, they should not affect the price of this cryptocurrency at all. However, there can occur situations when the price of the crypto is still affected. For example, during really large transactions, a word can get out, causing the shifts in the exchange rate of Bitcoin.
For example, when an early Bitcoin adopter wants to cash out their BTC belongings, the amount of the crypto might be so big that the trader needs to cooperate with several buyers. As a result, the lasts could also work on the exchange market, starting to lower the overall bitcoin price due to the drastically increased number of crypto on the market.
Thus, the OTC marketplace is a perfect place for investors to gather information. Plus, it helps to understand the real value of BTC at the moment. As OTC trading is the most beneficial for those who trade large sums of money, it would be accurate to say that those people who transfer million dollars worth BTC form the real price of Bitcoin on the market.
Also there the best place where to sell bitcoins!
Custody Will Increase the Volume
Many companies are now offering a service of custody, which means that they will store your bitcoin otc for you. This service is noticeably useful as the cryptocurrency remains vulnerable, and such companies guarantee its safety. As they already store your funds, they will also sell or buy or assets on your behalf.
Some of the most influential countries, such as the United States, Japan, South Korea, have already paid their attention to the regulation of the crypto market. This increases their influence on the market and on the price of bitcoin as well. Thus, the service of custody rises in popularity due to these issues.