What Is OTC Trading?
OTC (Over-the-Counter) trading involves negotiating large cryptocurrency transactions directly between two parties, typically through a specialized desk that acts as intermediary. OTC trades happen off the public exchange order book, so they don't create visible market impact. OTC desks handle the majority of institutional-sized crypto transactions.
How OTC Trading Works
OTC desks like Cumberland, Galaxy Digital, and Circle Trade facilitate deals typically starting at $100K-$1M minimum. The desk provides a quote (usually with a small spread over the exchange price), the counterparty accepts, and settlement occurs bilaterally. Some OTC desks also offer options, structured products, and lending alongside spot trading.
Why It Matters for Traders
OTC trading matters to all traders because it represents significant hidden order flow. A whale buying $100M of BTC through OTC creates no visible buy pressure on exchanges — but the on-chain settlement (when the BTC is transferred to the buyer) is visible. Understanding OTC dynamics explains why large on-chain flows sometimes don't correlate with immediate price movements.