How does OTC trading differ from traditional exchange-based trading in the cryptocurrency market?

3 answers

• Krabbe McMahonOct 24, 2021 · 4 years ago
  OTC trading, also known as over-the-counter trading, is a decentralized method of trading cryptocurrencies directly between two parties. It does not involve a centralized exchange platform. On the other hand, traditional exchange-based trading takes place on a centralized exchange platform where buyers and sellers trade through order books. OTC trading offers more privacy and flexibility in terms of pricing and transaction size, as it allows for negotiation between the parties involved. However, it may involve higher risks due to the lack of regulatory oversight. In contrast, exchange-based trading provides more liquidity and transparency, as trades are executed based on the order book and market prices. It also offers a wider range of trading options and features. Both methods have their own advantages and disadvantages, and the choice depends on the preferences and needs of the traders.
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• Abbas BirjandiAug 23, 2021 · 4 years ago
  OTC trading is like a private transaction between two individuals, while traditional exchange-based trading is like buying and selling stocks on a public stock exchange. OTC trading allows for more personalized negotiations and can accommodate larger transactions. It is often used by institutional investors and high-net-worth individuals who prefer to trade large amounts of cryptocurrencies without affecting the market price. On the other hand, exchange-based trading is more suitable for retail investors and traders who want to buy or sell cryptocurrencies at the current market price. It offers a more transparent and regulated trading environment, but may have limitations in terms of transaction size and privacy.
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• Ailton BenficaJul 24, 2025 · 4 months ago
  In the cryptocurrency market, OTC trading differs from traditional exchange-based trading in several ways. OTC trading allows for direct peer-to-peer transactions without the need for an intermediary. This means that buyers and sellers can negotiate the terms of the trade, including the price and transaction size. OTC trading is often used for large transactions and by institutional investors who prefer to keep their trades private. On the other hand, traditional exchange-based trading takes place on a centralized platform where buyers and sellers trade through order books. The prices are determined by the market and trades are executed based on the available orders. Exchange-based trading offers more liquidity and transparency, but may have limitations in terms of privacy and flexibility. Both methods have their own advantages and disadvantages, and it's important for traders to understand the differences before choosing a trading method.
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