When conducting fiat-to-crypto trading, the OTC trading desks should not be overlooked, especially when traders are facing the weakening US dollars problem in recent years. Using an OTC desk specifically takes care of high-volume transactions between fiat and digital assets, including USD to the mainstream coins. Meanwhile, exchanges are used more often on making profits from regular trading. And, OTC is a crucial tool when you consider any USD investments.
What is Over-the-Counter?
Over-the-counter (OTC) is a decentralized process that allows the two participants in a transaction, traders, and buyers, to trade directly through the broker-dealer network. All tradings are conducted electronically, and no central exchange or broker is involved. The OTC trade accommodates small to large crypto block trades. Therefore it is usually used by individual investors or institutional investors.
Why should you trade USD at OTC?
There is a principal benefit of using OTC trade. Sometimes, it is tough to execute large block trades in other places like traditional cryptocurrency exchanges. Since it may cause price slippage – the difference between the target price and the price executed. In other words, traders cannot secure the best crypto trading prices when the order book starts thinning out. Traders may need to wait until the bids get filled for the next round. The longer you hold the digital assets, the more risk you have to bear. Thus, using an OTC trade can help you lock your targeted execution price even you have to trade for a large-volume transaction.
Here are the detailed reasons why the mainstream adopting the OTC desk while trading USD or other fiats to crypto assets.
The Simple and Fast Settlement Process
The whole crypto trading process is simple via the OTC desk. Firstly, the OTC works like a platform to hook up the two only parties, a buyer and a seller. As the buyer, once you agreed on the price offered by the seller, your personal crypto account manager will help you run through the settlement process. Then you will receive the confirmation of your orders in a few minutes. If that is a crypto-to-fiat exchange, trading US dollar to Bitcoin, for example. It usually only takes a couple of minutes to execute the exchange. As a result, it is convenient for users who have to run this kind of transaction frequently.
Avoid Price Slippage
As mentioned in the introduction, the main advantage of using an OTC trade is to avoid price slippage. Generally, trading via the OTC for larger digital asset block transactions could offer a better price than market trades on the exchanges. The reason is a large block transaction takes a long time to execute, and by that time, the order book will start to thin out, worsening the problem of price slippage. You may turn out easily missing your target price, or even worse, you may need to accept a worse transaction price while you are waiting for the refill of the order book. However, the OTC will effortlessly help you to do the trick and protect your price. The price will be affected for trading large block transactions, as it locks your expected price once you have accepted the quote from them. For instance, OTC trade allows you to exchange USD for 2,000 Bitcoin at an ideal price. As a result, users do not have to worry about the risk of holding the assets for a long period, as well as keep an eye on the price regularly.
Lower Impact on the market
It will affect the overall market if someone conducts high-volume transactions on regular exchanges, as the transaction details will be listed out and seen by the public. But on the OTC trading desk, transactions only happen directly between the seller and the buyer, where it will not list out in an exchange order book. The tradings that happen through OTC are privacy-guaranteed and only keep to both of the parties. So, OTC connects to various liquidity providers to trade large amounts of assets without consequently moving the markets. Hence, if you need to do USD investments trade a large amount of US Dollars for any digital assets on OTC trade, it will help lower the impacts of orders of high volume on the digital assets market.
The OTC trading desk is better than crypto exchanges because they have highly liquid market trades 24/7. Usually, crypto exchanges have low liquidity in their order books, while OTC trade allows high liquidity transactions. It helps to push through large trade orders searching for market liquidity. OTC with deep liquidity allows you to conduct your large orders like the abovementioned point. Therefore, on the OTC desk, it ensures a high liquidity transaction when exchanging USD to digital assets, making sure you secure your target price during the trading process.
The whole transaction process is transparent. You make sure there is no cheating going on behind the pricing. If you are to place a large order of USD to Erhereum, the OTC desk will help you reach traders at your target price. The translation will only execute when you consent to the agreed price, ensuring you are fully clear with all the transaction pricing.
OTC trade is essential for high-volume digital asset players. It even outperforms other exchanges when it comes to conducting large transactions. There are plenty of trading firms where you can find the OTC service to specialize in your large transactions. Find a reputable digital asset OTC desk and compare different services before trading!
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