The price of bitcoin is flying at the moment – and if we can believe the experts, it is far from being over. And what surging prices bring is this: everyday more and more people decide to start investing in the famous cryptocurrency. Some invest just a little out of curiosity. Others decide to carry out transactions worth millions of forints, euros or dollars on the OTC market.
If you’re in the first group and only want to buy a fraction of a bitcoin for a couple thousand forints, you can do that here on Coinmixed or you can go to the Lurdy House if you want to use a bitcoin ATM.
But where should you turn if you belong to the latter category and want to trade in big volumes? Do you simply go to the same exchanges that the smaller traders use? Can those even handle the liquidity issues of selling and buying such huge amounts of cryptocurrencies?
Where are the large-scale investments?
Trading on exchanges is great for every day traders. But they might not be the perfect solution if you are a high net-worth individual who would like conclude large-scale investments. And with the bitcoin price surging at the moment, the perfect time to carry out those big volume trades is now, rather than later.
So let’s suppose you decide to make an investment. You’d like to purchase bitcoin for a couple million forints or some hundred thousands of euros. If the traditional exchanges are not the best way to do that due to insufficient liquidity and possible unwanted market changes caused by the trade, then what can we do?
Lucky for us, the exchange market is not the only way to buy and sell bitcoin and cryptocurrencies: the OTC market is where the big volumes change hands every single day. High net-worth individuals, financial institutions and enterprises conduct deals that are worth millions each and every single day. These happen far away from the exchanges and in increased anonymity.
Bitcoin is decentralized. It’s everyone’s money and no one’s at the same time. It’s for all of us. But when you have millions to invest, the club is suddenly way more exclusive than it was before.
It’s the game of the elite.
What is the OTC market?
Before we dive into why some investors choose the OTC market over the exchanges, let’s look at what the OTC market actually is – and how the bitcoin OTC market differs from, for example, the more well-known stock OTC markets.
When organizing financial markets, there are usually two different paths we need to differentiate between: the exchange market and the so-called OTC market (over-the-counter). The exchanges are fairly simple. You see the current price where bitcoin is trading at, you send in you order and pay the given amount, (you can access that here on Coinmixed) and with a bit of additional commission fee, you get your coins at the end.
Now, the OTC is a bit different. Here, the buyer and seller are trading directly with each other – no exchange intermediaries, only them and the OTC agents. In this case, when the buyer and the seller manage to agree on a given price at which they are both willing to conclude the transaction, they can settle the deal by paying directly to the other person. In this case, the transaction doesn’t make it onto the market. It is a private deal with increased anonymity and less impact on the actual market price. (Both of these attributes are very important and going to be explained a bit later on when we talk about the possible advantages.)
The bitcoin OTC market
Now the question is this: how is the bitcoin OTC different from this?
To be fair, it is not that different. The interesting thing here is that bitcoin market actually started out mostly on the OTC market. Even today, there are still a lot of smaller traders who like to use it for their everyday trading. Back in 2012, the majority of bitcoin trades were still carried out on the OTC markets. It was only a couple years later, when the bigger exchanges took the role from them.
But today, the OTC market might be even more important. Because even if the number of participants is lower, the actual volume traded on the OTC market is staggering. It is estimated that every day the private transactions are responsible for about the same volume as the exchanges are. Which means that every day several billions of dollars change hands on the OTC market with only a couple hundred or thousand participants worldwide.
The advantages of the bitcoin OTC market
So OTC trades are private, but is this the only reason people choose them over the exchanges?
OTC trades are carried out between individuals, and thus are way less transparent and subject to less regulations. It’s also important to point out that when really huge amounts are traded on the exchanges, it can have a visible impact on the market price – and usually not in a favorable direction for the trader that just finished the multi-million dollar deal. Another issue we mentioned previously is that a lot of exchanges have insufficient liquidity to process these enormous deals. This can lead to several problems and hold-ups during the transaction – and that’s something no one wants to see.
So to sum it up, the bitcoin OTC market is a huge part of the current cryptocurrency market – and it keeps on growing every day. High net-worth individuals often decide to trade on the OTC market instead of the exchanges to enjoy increased anonymity, the help of a trusted OTC agent and to minimize the liquidity issues and the trade’s impact on the market prices.
Bitcoin OTC trading in Budapest
So if you, for example, happen to be in Budapest and want to carry out a bigger scale investment, you can visit Lurdy House (address: 12-14 Könyves Kálmán krt.) where Coinmixed is located. There you can enjoy personal assistance to make sure you get the best deal on the OTC market and if you prefer, you can even pay in cash. Of course, KYC standards are very important to us but this can be easily satisfied by showing an ID or passport – this way we can make sure that we remain a trusted company by all.
Bitcoin is surging. The market, be it the exchanges or OTC, is growing bigger and bigger every single day. The revolution of money is not just about to start – it has already begun.