When it comes to trading crypto, there are a lot of different complex elements involved in the background that you might not know about. The concept of trading desks is one such element.
OTC (over the counter) trading desks such as Swyftx NZ OTC play a significant role in the industry, but investors have less knowledge about them. The OTC platforms are a boon for people and companies that want to exchange large volumes of crypto privately and safely.
Below are a few things that you need to know about crypto OTC platforms and how they work.
- What is the OTC market?
Financial markets are divided into two types- exchanges and OTC. For instance, NYSE or other trading platforms for crypto can be deemed as exchanges as they mediate between buyers and sellers.
Under an exchange type of market, the sellers will put a price they wish to sell their assets for, and the buyers will post prices they are willing to buy assets for. When both the prices match, the transaction is complete, and the exchange of assets is done.
However, the final prices of every asset are visible to the public eye on trading websites.
On the other hand, an OTC serves as a direct channel for a trade as it happens between two parties wherein one of the parties is referred to as a ‘desk.’ These desks are large companies or businesses that are dedicated to trading a particular class of assets.
In an OTC setting, both parties can decide on the final price and work on transferring assets themselves. Since no one is involved in trading in an OTC platform, the capacity of such a transaction increases as no one gets to know the final deal price and volume of the assets.
- What is crypto OTC?
Like regular OTC transactions, crypto OTC is the trading of assets directly amongst the involved parties wherein the volume and the deal’s price are kept under the wraps. There could be two types of transactions, fiat to crypto or crypto to crypto.
Like other OTC markets, the trade is often made between a specific ‘desk’ and any other individual or institution.
- What is the need for crypto OTC Desks?
The primary reason for the OTC crypto desk is to facilitate the trade of large volumes. So, for instance, if you try to buy more than a hundred bitcoins, you will face many issues.
Mainly because there will not be enough people selling that amount of crypto on a regular exchange platforms, you would eventually have to buy from different sellers.
If you plan to buy 500 BTC, you might be able to source the first few from different sellers. Buying crypto from multiple exchanges is a solution that can often help deal with slippage, but it requires one to be on different platforms and pay a small fee on each transaction.
So, the OTC desk is the most viable option to buy a large volume of crypto at an agreed price from the OTC desk, such as Swyftx NZ OTC. By going through this channel, you will buy large volumes in a single shot.
This is how OTC platforms work and the need to have OTC desks at their disposal. Such OTC platforms keep the markets flowing in the background by facilitating large scale transactions.