Over-The-Counter Exchanges and Cryptocurrency: Here’s What You Need To Know.
When it comes to cryptocurrency like Bitcoin, Ethereum, and the trading world, Over-The-Counter (OTC) exchanges are becoming a popular choice. Based on Coinmarketcap.com and its trading platform, cryptocurrency like Bitcoin accounts make up approximately 38.2% of the $13 billion market, with Tether making up 12.7% of this cap, and Ethereum making up 9.4%.
The principal reasons for the dynamics behind the OTC markets and cryptocurrency like Bitcoin are trading pairs. Because many of the altcoins like Ethereum and Tether are solely paired to Bitcoin, those looking to get into altcoins must purchase Bitcoin to add a new position in other coins. Digital currency trading with altcoins and Bitcoin are a different method of FX trading.
Concerning places where digital currencies can be bought, DEXs or Decentralized exchanges are popping up quite profusely, but they are entirely new to the trading world, so they have yet to make substantial inroads and noteworthy buzz.
Until the street gets a better understanding of the ins-and-outs of DEXs, and how to profit from them, centralized exchanges will be the central hub of trading for investors.
How Does OTC Help WIth Liquidity?
Over-The-Counter trading methods are the principal option when centralized exchanges do not have the available liquidity. Many cryptocurrency firms are concentrating on OTC. Some of these OTC firms have been flush cash — some reporting more than $100 million. Some of these exchanges have minimum orders of 75 thousand to dollars to 250 thousand dollars.
How are OTC trades arranged?
These days, trades are arranged — quite surprisingly — on Microsoft Skype. Although traders perform through centralized exchanges, under the tutelage of a regulatory body, Skype offers both an international and domestic level a free method of exchange.
Concerning some of the downsides involved in OTC, there are much more obscure price rates, and there is a higher settlement risk. And there can be some question of trust concerning brokers and their ability to examine counterparties, distinguish and non-associate from questionable funds.