What is Bitcoin OTC?
Bitcoin OTC works similarly to the traditional financial OTC markets. OTC refers to Over-The-Counter, and it means you directly negotiate and trade with brokers rather than trading on an exchange or other purely digital trading platforms. It is popular among individuals and institutions who wish to settle large orders quickly.
How Large is a Large Order?
Every Bitcoin OTC desk sets a different limit. Some OTC brokers set the minimum order size to 100,000 CAD, and some also set upper limits. At VirgoCX, any order larger than $30,000 CAD will be eligible to enjoy all the perks our OTC desk has to offer.
Why Shouldn’t I Place Large Orders on an Exchange?
I’m glad you asked! This is mainly due to how the market works. For instance, the bitcoin market is highly volatile and crypto exchanges usually don’t have high enough liquidity to maintain price stability, so market prices can shift dramatically as large orders are filled. The name of this effect is price slippage.
Price slippage can be generalized to the effect of prices moving higher as large buyers attempt to fill their buy orders and lower when large sellers attempt to fill their sell orders. In many cases, this is caused by insufficient liquidity at that moment in time for the market to absorb the shock from such a large order; in other times, market makers could potentially exploit the large buyer or seller by purposely moving the price away from them to maximize their own profits.
Many people don’t want to be negatively impacted by the effects of price slippage, so they choose to do OTC trading when buying a large amount of bitcoin.
Advantages of Bitcoin OTC
There are many reasons why people choose to do OTC trading.
1. Lock in Price
Crypto OTC allows people to buy and sell a large number of Bitcoins or other cryptocurrencies without price slippage. This is achieved by OTC brokers providing you with a fixed price. Once you confirm, OTC desks can fill large orders without significantly moving market prices.
2. Personalized services
Clients usually deal with trusted OTC brokers directly and receive more personalized services tailored to their needs. OTC creates a simplified process for investors who don’t want to go through the hassle of trading on an exchange. Each client will be assigned a dedicated broker to help them with the transaction. At VirgoCX, a team of experienced account managers will be helping the client reach their goals.
Unlike an exchange where the order book and trading activity is open to the public, OTC desks are not required to make their trading activities public, so clients enjoy a higher degree of privacy.
4. Prices & Fees
OTC desks offer the benefit of liquidity which may allow traders to obtain more favourable prices for Bitcoin and other cryptocurrencies (Ethereum, Tether etc) when compared to acquiring them through an exchange platform. Also, most OTC desks don’t charge brokerage fees. For example, At VirgoCX, we don’t charge the client any trading/commission fees and we value trust. So, there are no extra fees, and the amount our clients agree upon is what they pay.
How to Choose a Bitcoin OTC desk in Canada?
If you don’t already have a trusted OTC broker, you can find an OTC desk at many trading platforms across Canada. As mentioned, OTC trades and prices are not listed publicly, so it’s important to trade with a reputable OTC broker. For example, VirgoCX is a FINTRAC registered cryptocurrency trading platform with a distinguished OTC desk. It has a global presence and has a deep pool of crypto and fiat currencies that ensure fast and optimal price execution.
2. Time Zone
If you are located in Canada and want to trade with an OTC broker based in Asia, you might want to take into consideration the time difference if they have set business hours. They might not be able to respond to your request outside of those hours. But it doesn’t necessarily mean your option is limited to local dealers. There are some OTC desks, like VirgoCX, that operate 24/7 to help you with any of your trading or business needs.
3. Fiat/Digital Currency Support
When choosing an OTC service provider, you need to check whether it supports the fiat currencies you use and the digital assets you want to trade. With VirgoCX, clients will have access to multiple foreign and digital currency markets as VirgoCX is one of the few cryptocurrency trading platforms in Canada that has direct and multiple banking relationships globally.
Can I Sell Bitcoin Through an OTC Desk?
The answer is YES. Many Crypto OTC desks, including VirgoCX’s OTC desk, offer to purchase from you or sell to you many of the major cryptocurrencies (subject to minimum order sizing).
How to buy Bitcoin Through OTC?
1. Contact the Crypto OTC desk
You can contact VirgoCX’s Crypto OTC desk by email at [email protected] or call +1 (416) 583-1835.
If you choose to work with VirgoCX, the first step is to complete the onboarding process. One of our Crypto OTC Team members will go through the entire process with you.
3. Live quote
Once your application has been approved. You will then be able to perform larger block trades. A live quote will be provided for you upon request to buy or sell cryptocurrencies.
If you instruct to execute the price VirgoCX OTC provided, the price will be locked and you can expect it to be settled on the same day.
Wish to know more about Crypto OTC?
Please contact us at [email protected] or call us at +1 647-256-1976. One of our experienced account managers will guide you through the entire process from start to end and provide support whenever you need it.
Disclaimer: No Investment Advice The contents of this article are for informational purposes only and are not intended as, and shall not be understood or construed as, investment advice, financial advice or trading advice. There are substantial risks associated with the trading of cryptocurrencies and you should consult with a licensed financial advisor prior to making any trading or investment decisions. Content Not Warranted The contents of this article are provided “as is” and without warranties of any kind. You bear all risks associated with the use of the content provided including without limitation, any reliance on the accuracy, completeness or usefulness of any content available within this newsletter.