The public crypto markets are a live show. Prices blink, orders flash, and deals are done in a blink. But for large sums, this public stage is too risky. A single big order can sway the price, leading to costly losses. This is where OTC (Over-The-Counter) trading steps in. It is the private, direct market for big players. But how does a deal actually happen away from the open books? It’s a precise process, not a random swap.
In this article, we will discuss in detail how an OTC crypto trade works, from the first chat to the final settlement.
Initiation
OTC crypto trading starts with a need. A big fund wants to buy 5,000 Bitcoin, and a crypto miner needs to sell a year’s haul of Ether. They cannot just click buy or sell on an application for this deal. The market impact would be huge. So, they reach out to an OTC desk or a known and reputable broker like BitGo.
The client states their goal and gives the information about the asset and their requirements. The OTC desk listens. Their job is to find the other side of this large, specific trade. This conversation is private, often via secure chat or a direct call.
Quotation
After the OTC desk gets all the details of the deal, they tap into their deep network of buyers and sellers. They assess the current market condition and quote the live exchange price. In OTC crypto trading, the price is built for the size. The desk gives the client a firm quote, which includes a specific price for the full amount. This quote is an offer, good for a short time.
Negotiation and Agreement
The client sees the quote and may ask for a tweak. They may ask questions like: Is the price fair given market trends? Can the fees be lower? This is a brief and direct conversation. There is no open bidding. It is a one-on-one chat between the client and their broker. After that, they agree on the final price, the exact amount, and the fees.
Both parties also agree on the terms and conditions of the deal. How will the trade settle? Which wallets will be used? Who bears the cost of the network fees? All this is set in a deal. After that, both sides say yes, and this handshake binds them in the professional OTC world.
Execution and Settlement
Execution and settlement are the final and vital acts. The OTC crypto trade is not done with a single click. It is a careful transfer. The assets and funds move using the agreed secure method. The buyer sends the cash to the escrow account, and the seller sends the crypto to a held wallet. The escrow agent checks that both are correct. Then, the cash goes to the seller, and the crypto goes to the buyer.
This step kills the main risk: that one side pays but gets nothing. Once settled, the trade is complete. The OTC desk confirms with both sides. The large block of crypto has found a new home, with no public fuss and minimal market ripple.