From the Theraflu
that's in the back of your grandma's medicine cabinet
to the off-book trading made by whales splashing around in the giant sea of Bitcoin,
the phrase "over-the-counter" has a lot of different meanings.
Today, we're going to talk about what over-the-counter trading is,
why it's important and how it's different from exchange trading.
We will even cover why some of you guys may want to consider using OTC yourselves.
Let's get it.
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Welcome to BitBoy Crypto!
My name is Ben.
Everyday, I show you how to make money in cryptocurrency.
If you like money,
hit that Subscribe button and also be sure to check out the BitBoy Lab
for daily trading calls and even more in-depth analysis
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Okay, guys. So, before we get into what OTC trading is,
I want to quickly go over the difference between primary and secondary markets.
Just to make sure you are familiar.
So, in a primary market, individuals can buy securities like stocks and bonds directly from an issuer.
Many exclusive early round private deals
for what are now unicorn companies like Robinhood and Slack
all started with private sales in primary markets.
However, after the primary market sale was over and direct issuance is done,
a security then goes for sale in the secondary market.
This is where the rest of us get access.
In the secondary market, there are more or less two different types of trading,
exchange trading and OTC trading.
Then, the other type of secondary trading is--
Yep, you guessed it--
the topic of today's video.
What you've all come here to learn about.
OTC trading
Now, I know exactly what you're thinking.
But sadly, no,
over-the-counter trading is nothing like over-the-counter medicine.
So then, what is over-the-counter trading really?
Well, OTC trading can either be an exchange that occurs directly between two people known as
P2P or peer-to-peer trading
or an exchange that occurs with the help of an OTC trading desk.
OTC trading desks can make life easier for individuals who don't want to go through the whole rigamarole of trading on an exchange.
In addition, OTC trading desks offer the benefit of liquidity across a variety of crypto
and allows clients to transact with little to no slippage.
For those of you who don't know,
slippage refers to the difference between the expected price of a trade and the actual price at which the trade is executed.
Oftentimes, there's this misconception
that you have to have buku of bucks
and be a high-net-worth individual to trade OTC.
However, in reality, all you need to do is find a willing party and/or an OTC trading desk
who will sell in a denomination you're comfortable with.
I did my first OTC deal back in the summer with Caleb and Brown,
a global brokerage firm out of Melbourne, Australia.
They have outstanding customer service,
where each new client is assigned their own dedicated broker.
This is lightyears ahead of many of the exchanges that are out there today
who would take days weeks or even months
to respond to your customer service request.
And that's if they even respond at all.
Caleb and Brown's brokerage service offer 16-hour a day customer service windows.
The broker will work for you to get the best possible outcome to achieve your personal goals.
Each client gets assigned an experienced broker.
All trades are executed while maintaining quality assurance, accountability, transparency,
and since they're Australian,
an ostrich.
To find out more about what Caleb and Brown does,
you can find out by visiting cb.bitboy.live.
Ostriches are actually really mean.
OTC deals are great because they don't wreck order books with large volume trades,
prevent slippage and do not require a myriad of sellers and middlemen to fulfill orders.
If you want to do a large crypto deal on an exchange,
you'll typically have to do it across multiple orders from multiple sellers.
This can lead to different prices for all the transactions.
We see this on BitSwap all the time.
On top of a digital transaction fees to boot.
Who wants that?
Not me.
Especially if you have better options at your disposal.
OTC deals are instead made from decentralized dealer networks that lack a physical location.
These OTC trades are either cryptocurrency to fiat deals
or cryptocurrency to cryptocurrency deals.
Typically, you have to go to an OTC brokerage like Caleb and Brown,
but even some of the major exchanges have a dedicated OTC desk themselves.
One of the many things that makes OTC trading interesting is that OTC trades are not included in public order books.
There's actually a lot more volume going on out there than you think.
During an OTC trade, the transaction takes place directly between two parties
at a preset agreed-upon price
and thus does not need to be recorded in a public order book.
In some cases,
this is the very reason that someone chooses to execute an OTC trade
instead of a trade on an exchange.
When a large buy or sell order with hundreds or thousands of Bitcoin is executed,
a deal of that magnitude is quickly spotted and can affect the market.
However, OTC deals are not included in the order books and are a way to maintain privacy and unnecessary attention.
A lot of people seem to think
that only crypto whales could benefit from over-the-counter Bitcoin trading,
yet,
that is simply not the case.
Caleb and Brown, for instance, have a $2,000 minimum per asset with their brokerage team.
A lot of you guys spend that much a lot.
Now, I know that's not exactly pocket change,
but it's definitely not whale status either.
If you have $2,000 to invest in crypto,
want to skirt around some KYC and want to buy directly from a counterparty,
OTC trading is a solid choice for you.
OTC trading is also an option
if you want to liquidate the Bitcoin profits you earn from the last bull run.
Why should you have to liquidate it on one exchange across multiple transactions?
All of which will incur their own fee.
In OTC trading desks like Caleb and Brown,
they will find a counterparty for you and offer white-glove assistance every step of the way.
That's bad.
So, what do you guys think?
Does it surprise you that OTC trading isn't just for whales?
Do you think you might do your own OTC trade one day?
Let me know what you think.
Drop your comments down below.
That's all I got.
Be blessed.
BitBoy out.