How does OTC trading differ from traditional exchanges in the cryptocurrency space?

3 answers

• Artis KrauklisJan 10, 2023 · 3 years ago
  OTC trading, or over-the-counter trading, refers to the process of trading cryptocurrencies directly between two parties without the involvement of a centralized exchange. This means that OTC trades are not conducted on a public order book and are typically executed through brokers or dealers. In contrast, traditional exchanges operate on a centralized platform where buyers and sellers place orders that are matched by the exchange's order matching engine. OTC trading offers greater privacy, flexibility in terms of trade size, and the ability to negotiate prices directly with the counterparty. However, it may involve higher fees and counterparty risk compared to trading on traditional exchanges.
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• Oluchi MuogharaApr 10, 2022 · 4 years ago
  OTC trading is like a private negotiation between two parties, while traditional exchanges are more like a public marketplace. OTC trading allows for larger trades and more personalized transactions, as it doesn't have the same restrictions as traditional exchanges. However, OTC trading can be less transparent and may involve higher risks. On the other hand, traditional exchanges provide a more regulated and transparent environment for trading cryptocurrencies, but they may have limitations on trade size and less flexibility in terms of negotiation. Both OTC trading and traditional exchanges have their own advantages and disadvantages, and the choice depends on the specific needs and preferences of the traders.
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• Kevin VanDerMeidApr 16, 2023 · 3 years ago
  OTC trading differs from traditional exchanges in the cryptocurrency space in several ways. Firstly, OTC trading allows for larger trades and more flexibility in terms of trade size. This is because OTC trades are not subject to the same order book limitations as traditional exchanges. Secondly, OTC trading offers greater privacy and the ability to negotiate prices directly with the counterparty. This can be advantageous for institutional investors or high-net-worth individuals who prefer to keep their trading activities private. Lastly, OTC trading may involve higher fees and counterparty risk compared to trading on traditional exchanges. It's important to carefully consider these factors and choose the trading method that best suits your needs and risk tolerance.
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