Direct trading of assets between parties without using an exchange.
Over-the-Counter (OTC) trading refers to direct, peer-to-peer trades between two parties without using a public exchange order book. OTC desks handle large transactions discreetly, preventing slippage and minimizing market impact.
OTC is commonly used by institutions, whales, and high-volume traders.
Why OTC Trading Exists
Avoids moving the price in public markets
Offers personalized pricing and settlement
Ensures privacy for large transfers
Provides liquidity for illiquid assets or large blocks
How OTC Trades Work
Two parties agree on price and quantity
An OTC desk or broker facilitates the trade
Assets are exchanged directly between wallets or accounts
Settlement often occurs off-exchange
OTC trades can be automated (via smart contracts) or broker-assisted.
Use Cases
Institutions acquiring large BTC positions
Projects selling tokens to investors
High-net-worth individuals moving funds without slippage
Businesses handling treasury transactions
Summary
OTC refers to private, off-exchange trading between parties, commonly used for large transactions requiring discretion and minimal price impact.
