As a result, the OTC trading market trader only sends the purchased assets after the payments have been made.
Crypto trading platform how to#
If the Crypto OTC trading market successfully purchases all of the customer’s ordered assets, the customer is then notified of where and how to pay for the assets. Although the fact that the OTC trading market is using its funds to purchase a customer’s assets is quite risky because there’s a tendency for prices of the cryptocurrency assets to spike higher before they can meet the customer’s request, which could be a loss to the OTC trader in such a scenario. The Crypto OTC trading market then commits to delivering the asset upon mutual agreement, as per a legal agreement signed during the onboarding process.Īfter reaching an agreement, the OTC trader or OTC trading market provider searches its network for the best way to purchase the requested assets. The customer can then choose any of the options to either decline, counter (negotiate), or accept the offer. Here is a complete breakdown of how trading with a principal desk works:Īfter submitting a request via a chat application, a market trader responds with a price based on current market rates and conditions. This implies that the OTC trader is assuming risk on behalf of the customer in the process. Principal desks or OTC trading markets are structured in a way that funds from the OTC trader are used to purchase cryptocurrency assets at customers’ requests. This direct medium of exchange is precisely why there is such saturation in OTC markets-no one other than the parties involved is aware of the price and volume at which various assets are trading “over the counter.” In a Crypto OTC transaction, two parties agree on a price and then work out the transfer of assets. There are two types of OTC trading desks.Ĭrypto OTC trading is distinguished by the fact that trade occurs directly between two parties, one of which is typically a “desk” - a business dedicated to the buying and selling of a specific asset class.Ī Crypto OTC trading platform is a platform where customers interested in buying or selling cryptocurrency assets can meet with several OTC trading desks.
However, in OTC trading terms, an OTC trader is referred to as a “desk”. OTC trading usually occurs between two parties one party is referred to as the counterparty, and the other is referred to as the “desk,” which is a business or individual dedicated to buying or selling a particular cryptocurrency to individuals ready to transact.Īn OTC trader is either an individual or an agency that is dedicated to buying and selling cryptocurrency.
Crypto OTC trading platforms are also preferred to traditional exchanges because transactions are private between buyer and seller and there is room for price negotiations. OTC trading platforms are a method of performing cryptocurrency trades directly with the buyer or seller without the need for a third party or custodian.Ĭrypto OTC trading platforms are mostly used by large-scale traders who purchase a large volume of cryptocurrencies at once, which could be difficult to perform on traditional cryptocurrency exchanges. Over-the-counter trading, also called OTC trading, is a trading platform that occurs outside the traditional exchanges.
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