What is OTC? A Comprehensive Guide to Crypto Assets OTC Trading

In the world of crypto assets, when someone wants to buy or sell a large amount of Bitcoin at once, placing an order on a regular exchange may affect the market price due to the size of the order, resulting in a transaction price that is not as expected. Therefore, a trading method known as OTC (Over-The-Counter) trading has emerged.

Unlike the public bidding of traditional exchanges, OTC Trading is more like a "customized" transaction between buyers and sellers. It allows both parties to directly negotiate prices and terms, facilitating the transfer of large-scale digital assets outside the exchange order book.

##Core Features of OTC

The reason why OTC Trading has become the preferred method for large-scale Crypto Assets transactions mainly stems from its several distinct characteristics:

• Privacy and Non-Publicity: Transaction details will not be made public on the public order book, protecting the privacy and business strategies of both parties involved in the transaction.
• Designed for large transactions: OTC is specifically designed for handling bulk transactions, with single transaction amounts typically reaching several million dollars, effectively avoiding market price impacts caused by large orders.
• Customization and Flexibility: Buyers and sellers can negotiate terms such as price, payment methods (such as bank transfer, Alipay, stablecoins, etc.), and delivery time, providing greater flexibility.
• Minimize market impact: By negotiating trades privately, the transfer of large assets will not directly impact the prices in the public market, avoiding significant slippage.

How does OTC Trading work?

A typical OTC Trading process usually includes the following steps:

1. Choose a trusted platform: Traders first need to select a reputable OTC trading platform or broker, such as Gate OTC.
2. Request for Quotation: The buyer or seller submits a trading intention to the platform, specifying the type of digital asset they wish to trade (such as Bitcoin, ETH), quantity, and ideal price. The OTC Trading desk will provide customized quotes based on market conditions.
3. Negotiation Terms: Both parties finalize the confirmation of details such as transaction price, payment method, and delivery time. The premium or discount range for OTC Trading is usually within ±5%.
4. Trade Execution and Settlement: Once an agreement is reached, the transaction is executed in the background. The buyer pays the funds (fiat or stablecoin), and the seller releases the Crypto Assets to the wallet address specified by the buyer. A reliable platform will provide escrow services to ensure the security of the transaction.

##Why choose OTC Trading?

Compared to traditional exchange trading, the OTC market offers several significant advantages:

• Avoid slippage and obtain better prices: For large orders, trading directly on the exchange may result in unfavorable price fluctuations. OTC Trading is conducted at a pre-negotiated price, which avoids this issue.
• Access to deep liquidity: The OTC platform connects a vast liquidity network, allowing traders to quickly find counterparties for large trades and execute at competitive prices.
• Enhance trading privacy: The details of OTC Trading are not disclosed, making it suitable for institutional investors and high-net-worth individuals who do not wish to expose their large holdings or trading strategies.
• Flexible settlement methods: OTC supports multiple payment methods, including bank transfers, various fiat currencies (such as USD, EUR), stablecoins (such as USDT, USDC), and even some localized payment tools.
• Reduce large transaction fees: Many OTC platforms offer more favorable rates for bulk trades, which may be more cost-effective compared to splitting orders on exchanges.

##Who is using OTC Trading?

The main participants in the OTC market are usually "whales," institutional investors, and enterprise-level users:

• Institutional investors and hedge funds: They need to establish or close large positions in the OTC market with minimal impact.
• High net worth individuals: Investors holding a large amount of Crypto Assets wish to buy and sell assets in a private and efficient manner.
• Crypto Assets miners and project parties: Early miners or project parties often need to sell large amounts of Crypto Assets, and OTC Trading provides an ideal channel.
• Enterprises that need to conduct cross-border settlements: Some enterprises are starting to use stablecoin-based OTC Trading services for cross-border payments and settlements, as it is faster and cheaper than traditional banking systems.

Key Factors in Choosing an OTC Trading Platform

Choosing a reliable OTC Trading platform is crucial. A good OTC Trading platform, such as Gate OTC, typically has the following characteristics:

• Deep liquidity pools ensure that large trades can be executed smoothly.
• Competitive quotes and transparent rates with no hidden fees.
• High-level security measures and capital protection mechanisms.
• Support for multiple settlement methods and fiat deposit and withdrawal channels.
• Professional customer service, especially for large transactions, can provide dedicated account manager support.

Gate OTC and other service providers also offer a "one-stop" experience for fiat deposits, trading, and withdrawals, integrating a global banking network, and even enabling instant settlement for transactions under $1 million, greatly enhancing convenience.

##Risks and Regulations of OTC Trading

Despite the obvious advantages of OTC Trading, it is also important to pay attention to the following points:

• Counterparty Risk: It is very important to choose a reputable platform and counterparties to prevent fraudulent activities.
• Liquidity risk: For some low-volume niche tokens, the bid-ask spread in the OTC market may be large, indicating a lack of liquidity.
• Regulatory Environment: The global regulation of OTC Trading is gradually improving (such as the EU's MiCA legislation), and choosing platforms that operate within a compliant framework is key to reducing risks.

##Summary

OTC (OTC Trading) provides an efficient, private, and less market-impacting channel for large transactions in the Crypto Assets market. It has become an indispensable trading tool for institutional investors, high-net-worth individuals, and corporate users.

As platforms like Gate continually upgrade their OTC Trading services, integrating more convenient fiat channels, offering more competitive liquidity, and providing a safer trading environment, the threshold for OTC Trading is decreasing, and the experience is continuously improving.

Whether for executing bulk trades, seeking better prices, or ensuring transaction privacy, the OTC market plays a key infrastructure role in the Crypto Assets ecosystem.