JAKARTA – Crypto over-the-counter (OTC) trading is now increasingly popular as an alternative to investing in crypto assets other than through exchanges. Where in the OTC market, investors can buy or sell digital currencies such as Bitcoin (BTC), Ethereum (ETH), and others directly and privately with brokers or OTC service providers.
Unlike the centralized exchange, crypto OTC transactions are peer-to-peer between buyers and sellers without the involvement of third parties. OTC traders can flexibly negotiate the minimum number of orders, payment methods, prices, and transaction completion times.
Even so, there are still many unique and hidden facts about crypto OTC trading that most novice traders may not yet know. Here are 7 of them worth knowing:
1. There is no Order Book Public On the crypto exchange, there is an order book that can be seen by all its members. However, in OTC, the order book is private between traders and brokers. Prices can also be negotiated based on an agreement.
2. Minimum Transactions Can Be Very Large You can order 0.001 BTC on the crypto exchange. However, in the OTC market, at least orders can be thousands or even hundreds of thousands of dollars, depending on broker policy.
3. Trade Hours 24 Hours Nonstop OTC Market open trading 24 hours non-stop every day. This makes it easier for traders to buy or sell crypto assets.
4. Lack of Liquidity of OTC Minor Assets is suitable for large Bitcoin or altcoin trading with high liquidity. However, for minor coins, the volume and liquidity are usually low in the OTC market.
5. Cheaper Costs and Commission Trading costs and buying and selling commissions on OTC are generally lower than fees on crypto exchanges. However, there are still variations between OTC providers.
6. More Privacy and anonymity of OTC traders are more protected because there is no publication of order books. Personal data is also protected based on the policy of KYC/AML brokers.
7. Higher Counterparty Risk Given the nature of the less centralized OTC market, the risk of fraud or default from brokers or opposing traders is still small. So OTC broker research is highly recommended.
Those are 7 unique facts from the crypto OTC trading world that may escape the attention of most novice traders. Starting from the absence of public book orders, large transaction minimums, to higher counterparty risks than centralized exchanges.
The information above is hopefully to be a comparative material for novice investors and crypto traders when choosing whether to enter the OTC market or stay on the official stock exchange. As well as adding insight to better understand the ins and outs of investing in crypto assets through the OTC route.
By considering its various advantages and disadvantages, you can make a decision whether joining the OTC trading matches your risk profile and investment goals or not. Choose a trusted crypto exchange OTC, always do in-depth research and disciplined risk management!
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