The OTC market has been on a roll in recent months. Donald Trump's election victory in the US has spurred investor interest in cryptocurrencies, and they are now taking every opportunity to add to their digital holdings.

How to usually buy cryptocurrency

There are many ways to buy cryptocurrencies. The simplest and most common is cryptocurrency exchanges, where users trade coins among themselves at the market price. But all this happens within the framework of the trading platform, which may not suit everyone. Many people do not want to trust exchanges with their assets, since there is always a risk of hacking.

The next popular method of purchase is crypto exchanges. They are somewhat similar to currency exchange offices. Usually, this is a physical location where you can anonymously buy or sell digital assets. They also provide similar services online.

Also, one should not forget about P2P platforms, where purchases are made directly between people, allowing them to negotiate the terms of the deal. P2P trading can also occur without the involvement of a decentralized service.

Cryptomats are still in demand in many countries. These are devices similar to ATMs that allow for quick buying or selling of cryptocurrency. They are most often located in busy places, such as shopping malls.

However, all this is not suitable when it comes to large volumes of cryptocurrency. In this case, over-the-counter trading comes to the rescue.

What is over-the-counter trading

Over-the-counter trading (OTC) is the buying or selling of cryptocurrencies directly between participants in the transaction without the involvement of a centralized exchange. OTC trading occurs through specialized platforms or over-the-counter brokers. Such transactions often take place in a private format, allowing buyers and sellers to agree on price, volume, and other transaction terms.

The main advantage of over-the-counter trading is the ability to conduct large transactions with minimal impact on the market price of the asset. This "invisibility" makes this tool popular among institutional investors, hedge funds, and even entire states.

Over-the-counter trading also allows one to avoid many restrictions, such as exchange limits (almost any amount can be purchased) and regulatory restrictions (no government agency will prevent you from making a deal).

It has its downsides. These are related to the lack of transparency and centralized guarantees, which increases the risks of fraud, especially for inexperienced participants. Such transactions require trust between the parties or a mediator, which can be a problem if the broker or platform is unreliable.

Moreover, the process of organizing over-the-counter transactions is more complex than on exchanges and requires more time and resources, making them less accessible to retail investors.

The rise in popularity of OTC trading

The end of 2024 has been successful for cryptocurrencies. Bitcoin's price surpassed $100,000 for the first time, and the new president of the United States is pro-cryptocurrency Donald Trump. All this has provoked a frenzy around cryptocurrencies, and the demand for digital assets has increased dramatically. Bitcoin reserves on cryptocurrency exchanges have decreased to 2.3 million coins, a new historical minimum.

Due to the shortage of bitcoins on exchanges for large companies, the turnover of OTC platforms has increased dramatically. For example, the volume of over-the-counter trading on the Kraken exchange has increased by 220% compared to last year, and a similar rise is observed across all major platforms, reports The Block.

"The over-the-counter market is just buzzing right now. Prices have risen, but so have the volumes," said Tim Ogilvie, head of the institutional department at Kraken exchange.

He and other market participants noted that the interest of large investors is not limited to Bitcoin. They are also buying large volumes of Ethereum, Solana, BNB, TRON, Aave, and other assets. Investors are confident in the further success of products such as spot Bitcoin ETFs and Ethereum ETFs, and are also awaiting the emergence of similar funds based on altcoins.

Conclusion

There has been a surge in the cryptocurrency market for several months now. More and more people and companies want to buy digital assets, but there aren't enough coins for everyone. Against this backdrop, the popularity of over-the-counter trading is growing, significantly simplifying large purchases or sales of cryptocurrencies.

OTC trading allows for large transactions to be conducted anonymously, minimizing the impact on the market price and bypassing regulatory restrictions. This makes it particularly attractive for institutional players and companies seeking privacy.

However, alongside the advantages, over-the-counter trading has its downsides. The lack of transparency and centralized guarantees increases the risks of fraud, while the complexity of organizing deals makes this tool less accessible to retail investors. Despite these disadvantages, the over-the-counter market remains an important element of the cryptocurrency ecosystem, especially during periods of increased market activity.