OTC (Over-the-Counter) Trading
OTC trading, or over-the-counter trading, is a process of buying and selling cryptocurrency assets directly between two parties without the use of an exchange. OTC trades are usually facilitated by brokers or market makers who provide liquidity to the market and act as intermediaries between buyers and sellers. The main advantage of OTC trading is that it allows for larger transactions than what traditional exchanges can handle; however, there can be some drawbacks such as higher costs due to brokerage fees. Additionally, OTC trades are not subject to price discovery processes like those found on regular exchanges which could lead to lower prices in certain cases.
The Pros & Cons of OTC Trading
Pros:
– Allows for large trades which cannot be accommodated by most traditional exchanges
– Can often result in better execution prices when compared with standard exchange rates
– Provides anonymity since no personal information needs to be shared with third parties
Cons:
– May involve higher fees due to brokerages involved in facilitating the transaction
– Not subject to price discovery like other exchanges meaning users may get worse deals if they do not shop around carefully
