If anybody asks you, "Hey, how can I get some cryptocurrency?" You're most likely going to suggest a popular exchange for them to buy some cryptocurrency in exchange for cash. However, the truth is, not all trades happen within the spotlight; several high-value transactions happen behind the scenes.

Crypto OTC transactions provide a means for two users to swap crypto for cash or a specific crypto asset for another crypto asset while skipping the exchange platforms (that act as the middle man) and trading directly without affecting demand and supply dynamics in the general market.

OTC trading is a long-standing style in traditional finance, long before cryptocurrency became popular. However, over-the-counter (OTC) trading is now common within crypto transactions too.

In this article, we'll unravel the intricacies of OTC trading, its benefits, and its impact on the dynamics of the broader crypto market.

What is Over-The-Counter (OTC) Trading?

Over-the-counter (OTC) trading is a trading style that involves a direct deal between a buyer and a seller without venturing into a public market.

OTC trading is as old as traditional finance, and the basic principles remain the same in crypto trading. Unlike typical exchange transactions, where prices are dictated by the market's supply and demand, OTC crypto trades don't play by those rules. Instead, the two parties directly agree on the price, detaching it from the crypto market's volatility.

OTC trading is usually very beneficial to create a customized trading experience for high-value deals that could significantly impact the crypto market.

For example, early whales and holders of Bitcoin, who hold several million dollars worth of Bitcoin, could move the large amounts with OTC transactions to maintain a stable price for Bitcoin. Because selling that much Bitcoin on an exchange would negatively affect the market and could cause a series of sell-offs and losses.

How OTC Crypto Trading Works

Typically, OTC trading isn't executed on platorms. It is mostly arranged via a community of known people. However, with increased popularity and acceptance of crypto assets, OTC trading is now widespread.

Picture this: a buyer and a seller are ready to rock a significant crypto deal via an OTC trading platform. Each party itemizes the amount of crypto asset needed, a price that suits either party, and the preferred payment method. Once the terms are set, the OTC trading platform creates an order, holds the crypto asset in escrow, and waits for the seller to confirm the payment before releasing the asset to the buyer. In rare cases, where transactions cannot be immediately confirmed, an escrow may get involved to settle disputes. However, typically, the system is automated and only occurs between the buyer, seller, and the automated platform.

In OTC trading, there are no fixed prices; the seller and the buyer both have to agree on favorable terms, regardless of whether it tallies with the existing market prices or not. It could be a simple swap between two cryptocurrencies, stablecoins, or fiat currency and a cryptocurrency.

Advantages of OTC Trading Platforms

• Limitless Liquidity: Executing high-value transactions via a public exchange may be dicey. The exchange may not have enough assets to contain the exchange, leading to fragmented trades. Of course, everyone prefers to complete a transaction at once and not in several bits. However, there is no limit to OTC transactions; as long as there is a willing seller with the needed volume, the transaction will be executed seamlessly and all at once.
• Anti-Volatility: The trading data of exchanges is quite public and easily accessible by many. Hence, the news of someone selling a huge amount of cryptocurrency could trigger sell-offs and cause the value of assets to tank. However, the confidential nature of OTC transactions means that this trading information is contained within a smaller circle without public prying eyes.
• Confidential and Direct Transactions: Exchanges are obligated to facilitate and publicize transaction data, which may not be the best approach for crypto investors. Selling your crypto assets may make you liable for certain capital gains taxes. However, since there is no direct transaction between a holding exchange and a traditional financial institution, OTC traders can shield their transaction history from bureaucratic organizations until they are ready to properly file taxes without being under any pressure.

Cwallet's Over-The-Counter (OTC) Trading Functionality

Cwallet facilitates OTC trading capabilities for transactions of all levels with fast, confidential transactions that do not pass through an exchange.

Of course, Cwallet helps to ensure that transactions are guided by preventive measures in place to avoid fraud.

Although Cwallet's system is fully automated, escrows are available in rare cases where intervention is needed to de-escalate possible conflicts. Traders are fully insured against fraudulent attempts to take payments without fulfilling the orders.

Cwallet's service is ABSOLUTELY FREE - you can execute OTC trades without worrying about paying a certain percentage of your traded amount as fees; hence, you can maximize your trading profits.

Get Started As An OTC Trading Merchant With Cwallet

Cwallet's OTC functionality makes it easier for merchants to manage multiple orders simultaneously, saving time and improving efficiency while handling multiple high-value or small-scale transactions.

Hence, as a merchant, you can achieve better customer satisfaction, while enjoying the perks of partnership with Cwallet.

Getting Started!

Getting started with Cwallet and accessing the OTC function is pretty easy; all you need to do is sign up on Cwallet, download the app, and voila!

For more information, stay tuned to the Cwallet blog or contact our help desk on Telegram.