Home / Cryptocurrency / Does the OTC market actually have a significant impact on the price of Bitcoin?

Does the OTC market actually have a significant impact on the price of Bitcoin?


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The over-the-counter (OTC) market has long been considered larger in size and volume than the encrypted market, with a greater impact on the Bitcoin price.

Large institutional investors and high-profile retailers often rely on the OTC market for orders that typically exceed $ 1 million to provide the market with sufficient liquidity to ease the transaction.

Because the OTC market is better than the Bitcoin exchanges

On important fiat-to-crypt exchanges such as Coinbase, Skew, a provider of cryptocurrency options market data, said the purchase of over $ 4 million in Bitcoin could cost an investor a 10 percent premium. .

The inefficiency of placing large orders on cryptocurrency exchanges naturally leads investors into the OTC market, since large premiums result in substantially higher rates.

The Skew research team he wrote:

Buying 1,000 BTCs to the market today on Coinbase would cost you $ 4,400 per coin, almost 10% of the premium to identify just one $ million trade. Not well. As in FX, the liquidity for the physical bitcoin is fragmented through the exchanges in such a way that the market makers usually put together the various order books – & # 39; aggregated orders & # 39; – and run through the offices. However, liquidity for the physical bitcoin is not great.

Over the last few months, several major cryptocurrency exchanges in brands such as Coinbase have established custody solutions to help institutions invest in the digital goods market with high liquidity.

The minimum investment threshold on Coinbase Custody is $ 5 million, which if purchased on criptovalute could easily result in a 10-15% discount rate.

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Benchtop cryptocurrency trading could be three times larger than the volumes of conventional bags, silently moving the price of the bitcoin in one way or another.

In July, TABB Group, an international research company, reported that the OTC market is estimated to be two or three times larger than the market for cryptocurrency trading.

The cryptocurrency currency market processes about $ 4 billion of Bitcoin transactions on a daily basis. Based on the results of the Tabb Group, the OTC market could trade nearly $ 8 billion a day and up to $ 12 billion.

At the time, Monica Summerville, a senior analyst at FinTech at Tabb Group, answered questions about the lack of movement of large transfers on the Bitcoin blockchain stating that in many cases, Bitcoin holders pass on their wallets and private keys to their wallets. buyers and as such, not all transactions are transmitted to the public blockchain.

"Our reports are based on interviews and with market participants, covering more than BTC and remember that not all transactions appear on public blockchain like many omnibus accounts of locations, so only the net changes to their positions will be written on public blockchain " she said.

The case will increase the volume

In the fourth quarter of 2018, Fidelity, the fourth largest asset manager in the world, debuted Fidelity Digital Assets to provide cryptocurrency custody for institutional investors.

The trend in several important markets, including Japan, South Korea and the United States, is shifting from the development of infrastructure focused on individual operators to custody solutions and tightly regulated investment vehicles, which could allow the OTC market to have an impact even higher on the long-term price performance of Bitcoin.

Shutterstock foreground image. TradingView Charts.

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