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Buying Bitcoin OTC (Over The Counter)

The history of cryptocurrency is filled with people who had a dream. It wasn’t an endeavor to make a fortune. They sought a decentralized system that could alleviate a lot of the financial distress the world is suffering from. The birth of bitcoin was 10 years ago, and every year, had seen exceptional development and innovation in the whole network of cryptocurrencies. Before bitcoin, developers have met obstacles that were so troublesome that it made it impossible to see the idea to the end, yet it proved to be very beneficial as an inspiration to bitcoin. The most important year was the year bitcoin was developed by Satoshi Nakamoto, an unknown man or a group of crypto specialists. A published guide on how the bitcoin blockchain works called the white paper, which was the day bitcoin started grabbing the attention of everyone interested in its potential success.

How does it work?

We need to discuss how the bitcoin blockchain works before we move on to explaining the idea behind buying bitcoin over-the-counter. A blockchain is like a ledger when you look at it from a traditional angle. It’s a dynamic list of records that keeps growing every time a transaction happens; it uses blocks as records and links them directly using cryptography. What makes these records secure and not readily vulnerable to hacking attempts by third parties is cryptography. Blockchains aren’t hidden from anyone. They are public and viewable by anyone, no matter who they are. The only way to edit the blockchain is by simply making a transaction. That’s all the editorial access you have, simply adding a transaction and you can’t reverse it once it’s done. What validates the blockchain is a large network of computing power that makes sure that all the numbers are the same on every computer using mathematical equations. Like a voting system, when the majority of the computers connected to the blockchain decide that adding a new block is valid or invalid, it goes through.

The best way to exchange bitcoin

When people would like to buy or sell bitcoin, they resort to public bitcoin exchanges. While these public exchanges are great for trading small amounts of bitcoins, yet not the perfect way to exchange big masses of bitcoins. The majority of huge bitcoin transactions happen securely using a different method called over-the-counter transactions. Public exchanges proved to be not the most convenient way to trade large numbers of bitcoins because of security concerns, limits on traders, and bad reputation reports or allegations of market manipulation. Public exchanges operate on a simple principle. Those who are willing to sell their bitcoins set the price they want it to be bought at, and then the public exchange matches the seller with a buyer who is willing to pay the specified price. This process doesn’t happen immediately; it may take some time, but the probability of the match depends on the number of traders, the higher, the better. OTC trading is available by the use of brokerage systems. OTC replaces the middleman who holds the money, the exchange, with a medium that merely allows the connection between high-volume traders. The transaction is completed using a peer-to-peer system, or by assigning intermediaries. This completely removes the risk of transaction failure due to the freeze of blocks and security vulnerabilities. We’ll be providing you with everything you need to know about buying bitcoin OTC and whether it is a smart move or not.

The volume of OTC market

Last year, a report stated that the volume of OTC bitcoin transactions was 12 and 30 billion dollars per day. While the number may vary greatly, it’s commonly known that OTC bitcoin trades are twice or thrice the volume of exchange trades. Claims that cryptos are faking or falsifying their trade volume of publicity are making things more confusing as OTC trading may not be visibly clear like exchange trading. It didn’t stop there; OTC markets are further expanding to accommodate more traders and add extra security to cater to more traders. It’s normal for OTC markets to expand as hedge funds and other big investors are taking an interest in it.


The emergence of Facebook’s Libra coin is surely foreshadowing a lot of battles for regulation. The more the profits start increasing, the closer the inspection for any foul play. Buying bitcoin OTC is a process that operates using a different process than the commonly used one. People only find out about the transaction after it’s done, not to mention that OTC providers do not publish any records related to the volume of the transaction, making it harder to keep track of. It’s only natural for people who operate using OTC brokerages to be aware that there are risks that may accompany it in the future. Modern investing regulations are more inclined to give more options to those with higher capital; some exchanges may only allow individuals or entities with high-profile trading capital to engage with them. The concept behind OTC trading is that it doesn’t require this screening process to allow individuals to trade whatever volume they have in mind. Some believe that some deals brokered by OTC can prove to be reckless, which is why a lot of people are asking for comprehensive regulation.

Who uses the OTC market?

The OTC market is accessible for use to anyone. That doesn’t mean that anyone could trade in it as it depends on brokering two interested parties or traders. There’s no actual profit or investment that can be made with low amounts of BTC in an OTC market. There’s no actual minimum that you need to gather before you trade; it’s just that your trade could take longer as it is in a competitive field with parties with different interests than yours. If you don’t happen to have a large number of bitcoins or enough cash to buy a large number, it wouldn’t be worth it at all to enter this market. Some traders use arbitrage to make a quick profit. In a crypto market where prices are constantly volatile, different exchanges and people sell and buy bitcoin at different prices. Experts can use arbitrage to buy at a price from an entity or an exchange and trade it for a better price at a different place. The crypto market is extremely complex, this is why only crafty professionals can pull such a move off.

bitcoin otc


The effect of moving or exchanging huge amounts of bitcoin can be very disruptive and consequential. Similar to the idea of stocks, when the market is full of people who want to sell something and you sweep in to offer to buy all their stuff, the price of that item is going to increase a lot. If someone with a huge abundance of something announces to sell it all at once, the price of the item will hit a low. This is a clear example of slippage, which happens across many different markets besides crypto markets. Cryptocurrency is known for its volatility, the only currency worth almost a trillion dollars that can fluctuate with rises and drops over 50% of its value. So, the ripple effect of huge hedge fund investors buying hundreds of thousands of bitcoins or gigantic miners selling hundreds of thousands of bitcoins can affect the whole market. Buying bitcoin OTC prevents slippage from happening by making these trades right under the table of the media. A buyer or seller knows that causing a disruption isn’t in their benefit, not just because of the state of bitcoin worldwide, but also as it can affect any deal that’s been locked down at a price. It’s common for OTC providers to require a minimum of almost a hundred thousand dollars to be available to lock down a deal.

Crypto whales

The trickle-down economic theory can explain how the huge whales of cryptocurrencies can affect the crypto market. The scene is filled with impacts caused by big-name investors, these impacts can go unnoticed if not unannounced. The market cap is the most noticeable example. The market cap for all cryptocurrencies combined 2 years ago was 17 billion dollars, now it’s exceeding 770 billion dollars. The market cap wasn’t simply augmented by average traders on the exchanges. The bulk of the increase in the market cap was due to countries like China and huge hedge funds, injecting these huge amounts of cash without disrupting the flow of normal day-to-day transactions. It was only possible using OTC, a sudden injection like this could cause the cryptocurrency to start taking damage. This has caused more stability in the cryptocurrency market as small to medium-sized buyers are now able to enter the market without causing a disturbance with even higher values than before. The whales poured a lot of liquid cash that acted as the invisible backbone of bitcoin. When transactions weakened and the exchange volume was watered down, this liquid cash net was a safety precaution to show that bitcoin still has a bright future.

Monitoring whales movement

Watching the cash and bitcoin movements of whales isn’t easy since OTC providers or brokers necessarily keep their ledgers private, hidden from the public eyes, from transactions to cash flow, as that’s one of the main reasons that whales use OTC for. Whales hold more power than anyone would like them to. Whales are naturally lower in number than normal crypto buyers, but that doesn’t mean that they are not closely watched. Almost all bitcoin buyers monitor the whales’ activity to know if there’s something up or not or to be warned against pump-and-dump scenarios, and other campaigns. Noticeable increments in the total market cap can be used to indicate certain movements and shifts caused by the whales like a new listing or a roadmap release. Consistently strong changes in the market cap that cannot be explained or tied to a specific event are usually caused by whales’ movement. If the prices of bitcoin undergo major crests or troughs and then rapidly change in price, it’s probably not by the work of whales. An interesting feature that only the blockchain network seems to boast the creation of a list of the 100 richest bitcoin addresses, allowing you to directly witness the whales at work.


There is a reason bitcoin dominates the world of liquid cryptocurrencies, and it’s because selling or buying bitcoins is almost effortless. The bitcoin market operates mainly on the high demand of the currency, which results in increased trading. As bitcoin proved to be an asset of high liquidity, it doesn’t mean that all other cryptocurrencies or altcoins have this highly efficient dynamic of supply and demand. The wave of initial coin offerings was the resultant of Ethereum’s innovation that allowed the creation of cryptocurrency to become much easier than before. It’s quite easy to obtain altcoins that hold no actual value, yet selling them is going to be the hardest ordeal. OTC trading is not recommended at all for the purchase of illiquid as it is a risky practice.

Costly mistakes

It may seem common sense to shop around to get yourself the best deal. In OTC bitcoin trading, doing so can cause you to lose a lot of money. When you keep checking brokers for the best price, you’re giving them a hint that you’re looking to secure a big transaction. Brokers can use this information against you and manage to drive the bitcoin price a bit higher or lower since they now know what kind of big transaction would take place in a specific time. This is why it’s not recommended to give this kind of information except to trusted brokers, in addition to shopping for prices for a long time to throw the brokers looking to make a profit off of your information are thrown off. You can also ask for the buy and sell price of the specified number of bitcoins which will make the broker unable to make an informed decision as to whether they should sell to drive the price down or buy to make it rise.

Trading bitcoins OTC is similar to negotiations; you’re trying to get the best bargain out of the many deals and offers. This could easily get overwhelming. You’ll want a trusted broker with you who could guide you along the way, helping you decide when you should sell or buy, and why. The new frontier of trading bitcoin has allowed new institutional ventures and entrepreneurs to take advantage of opportunities and realize the true potential of bitcoin.


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