What are OTC markets (Over The Counter trading)?

Exchanges help buyers and sellers find each other and act as an intermediary. On an exchange, you indicate the price at which you want to buy or sell a cryptocurrency. When the prices overlap, the cryptocurrency exchange executes the order. All orders on an exchange are fully transparent and can be viewed by anyone. This way you can see which orders have been filled or which orders may be filled soon.

Difference between the OTC market and the regular crypto market

The difference between regular trading on an exchange and OTC is that an OTC order is executed directly between two parties. There is no intermediary, like an exchange, involved. One party is generally a trading desk, a company that specialises in buying and selling large amounts of cryptocurrency. The other party is the investor. The advantage for both parties is that they can agree on a fixed price for any cryptocurrency in advance. Because these involve very large quantities, the same order placed on an exchange would cause the price to rise. Through Over The Counter trading, the price on the exchange remains the same, while a large investor can still acquire cryptocurrency for their portfolio.

An Over The Counter order takes place between two parties, which means nobody can see who bought cryptocurrency, how much and when. Hence the name Over The Counter. The majority of trading takes place via OTC markets, both in cryptocurrency and in traditional markets.

OTC trading is especially popular among institutional investors, companies and high-net-worth individuals who want to buy or sell large amounts of crypto without affecting the market price. Think of orders ranging from hundreds of thousands to millions of euros. Several major exchanges now also offer their own OTC desk.

For regular investors, trading via an exchange is the most common and accessible option. At Bitvavo you trade at a maximum of 0.25% trading fees across more than 440 cryptocurrencies, and thanks to its deep order book in Europe, larger orders are also executed efficiently.