Uncharted Bitcoin OTC Markets Gear Up For Institutional Inflows

Story by: Aaron Stanley

As the entrance of institutional players into the crypto space continues to draw nigh, the market for a murky off-exchange form of trading known as over-the-counter is becoming an increasingly critical lynchpin to the cryptocurrency ecosystem.

While most people looking to buy or sell cryptocurrency can do so through standard exchanges, large institutional investors and high-net worth individuals who transact in large volumes of bitcoin must look to the relatively uncharted world of OTC markets to execute these trades.

Because cryptocurrency exchanges typically lack the technological infrastructure and the liquidity required to execute large block orders, big buyers and sellers are effectively forced to find one another by venturing into Skype chatrooms hosted by proprietary trading firms like Cumberland, private messaging platforms like Telegram and even public forums like LinkedIn.

“The big deals have to go OTC. A lot of the exchanges limit the order size, so you have to break up your orders, and that’s just fatal,” explained Monica Summerville, director of fintech research at Tabb Group, a U.K.-based market research firm.

Breaking up a large sell order of, say, 1,000 bitcoins, could send an adverse signal to the market and trigger what’s known as slippage – whereby the price of a trade at execution is different than the expected price.

Original story by: https://tinyurl.com/ycktz8zz

by