Disadvantages of OTC Crypto
OTC exchanges are used for the trade of digital currency like bitcoin. They are a dedicated trading desk that works between a buyer and a seller to complete transactions. In 2018, billions of dollars worth of crypto were exchanged over the counter, and they have grown in popularity because they make the process of purchasing large amounts of the cryptocurrency easy. They also provide professional hand holding and help customers place trades on their behalf.
The primary disadvantage of retail crypto exchanges is their limited liquidity. For example, the average daily trade volume for bitcoin, ethereum, and tether is $72 billion. Obviously, the higher the volume of a single trade, the lower the price. This is especially problematic when trading tokenised assets that are tied to physical properties. That’s why you need to find an exchange that has a huge liquidity pool.
An OTC exchange is similar to a traditional Forex exchange in many ways. It offers transparent pricing, readily available liquidity, and a low cost of entry. In addition, OTC crypto is a good option for investors who want to handle their own taxes. Since the trading volume of these cryptocurrencies is limited, OTC desks can potentially save clients money. However, be wary of OTC desks with little or no reputation.
The Advantages and Disadvantages of OTC Crypto
OTC exchanges offer a wide range of services and features, including customer support, different types of trading pairs, fiat gateways, and initial exchange offers. Additionally, many OTC exchanges have their own customer support teams and provide assistance in a variety of ways. Some even feature a DeFi service, which means that users can lend or borrow cryptocurrency to use on an OTC exchange. They should always be able to provide a secure and reliable environment for trading.
In addition to its OTC exchanges, many retail exchanges also offer limited liquidity. Currently, approximately $72 billion in trade volume is available on each platform, according to CoinMarketCap. With this much liquidity, the volume per trade is very low. This makes it an inefficient choice for investors looking for larger volumes. A centralized exchange provides a higher level of security and a wider range of trading options. In contrast, retail exchanges have few or no liquidity.
The biggest issue with retail crypto exchanges is the lack of liquidity. According to CoinMarketCap, a daily trade volume for cryptocurrencies is $72 billion. The volume available per trade is directly proportional to the liquidity available on each platform. For these reasons, an OTC exchange will be able to accommodate the largest orders. Its liquidity will be crucial to institutional investors looking to trade crypto. So, it will be essential to have an OTC exchange.