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Author: Admin | 2025-04-28
Market fluctuations, providing certainty for the customer.Asset Sourcing by the OTC Desk: The OTC desk then works to source the required cryptocurrency. They either use their own funds (in Principal Trading) or act as intermediaries (in Agency Trading), finding sellers willing to meet the terms. During this time, the desk taps into a wide network of exchanges, liquidity pools, or other OTC desks to fulfil the order.Transaction Completion: Once the OTC desk successfully acquires the assets, the customer is provided with payment instructions. After the payment is made, the cryptocurrency is transferred to the customer’s wallet. In agency trades, if the market price changes unfavourably before the purchase is completed, the customer may need to adjust their offer or wait for better market conditions.Settlement and Delivery: Payment is usually made through a bank transfer, and in some cases, escrow services or even in-person settlements are used for larger transactions. Once the payment is confirmed, the assets are delivered to the customer, and the trade is complete.Principal vs. Agency Desk in Crypto OTC TradingIn Crypto OTC trading, you can either trade with a Principal crypto OTC desk or an Agency Crypto OTC desk. In Principal OTC Trading, the OTC desk uses its own funds to buy or sell cryptocurrency for the customer. The desk assumes market risk because it needs to fulfil the customer's request, even if the price of the asset fluctuates during the process. For instance, if you request 500 BTC, the desk will buy those assets with their own funds and deliver them to you at the pre-agreed price, even if market prices rise before they complete the transaction.On the other hand, Agency OTC Trading operates differently. In this model, the OTC desk acts as an intermediary without using its own funds. The desk matches buyers with sellers, but the customer bears the market risk. If prices move unfavourably before the trade is finalised, the customer may need to adjust their offer. The desk charges a fee for this facilitation, but unlike in Principal trading, it doesn’t assume the risk of price changes.Why Use a Crypto OTC Trading Desk?OTC desks are widely used by high-volume traders, institutions, and hedge funds to handle transactions typically starting from $50,000 or more. They allow these entities to execute large trades without the price slippage or public exposure often seen on exchanges. By using an OTC desk, customers can negotiate prices directly with a broker, who then connects them with buyers or sellers. This ensures the trade is kept private and prevents the market from reacting to large transactions.One key advantage is that OTC desks provide discretion, meaning trades aren't reflected in public order books. This prevents significant price movement due to large buy or sell orders. Furthermore, the process mitigates price volatility since the trade is executed at a pre-agreed price, ensuring there are no fluctuations that could otherwise occur on a public exchange.However, OTC trading does carry risks, particularly counterparty risk. Since trades are private, there’s a potential for one
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