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How does Bitcoin OTC work? Guide for beginners!

How does Bitcoin OTC work? Read more if you want to learn about OTC trading and find out if it is the best option for you!

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by Victória Lourenço

Published on 03/20/2022

Bitcoin OTC: learn our tips to start your journey in the OTC trading market

Learn all about how to start your Bitcoin OTC journey and how it all works! Source: Unsplash
Learn all about how to start your Bitcoin OTC journey and how it all works! Source: Unsplash

If you’re interested in investing in bitcoin, one way to do so is through a process called over-the-counter (OTC) trading. In this post, we will explain how Bitcoin OTC trading works and provide some tips for beginners. Keep in mind that OTC trading is not as simple as buying stocks on an exchange. It is essential to be familiar with the process before you get started.

Moreover, over-the-counter (OTC) trading is simply another method for you to invest in and trade your stocks in the cryptocurrency market. OTC trading is also a method of trading that eliminates the need for a middleman, which is the exchange component. For this trading method to be successful, there is only the need for buyers and sellers.

Also, you can perform this type of trading online and in a bit less formal way than in the regular trading market. So, read more to know how to start your journey in the OTC trading market!

physical representation of a Bitcoin

Bitcoin crypto: how it works?

Investing in Bitcoin crypto can be lucrative but also challenging. Before deciding to go through with it, take a look at how it works in this article!

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What is an OTC Bitcoin?

See how this type of OTC trading works! Source: Unsplash
See how this type of OTC trading works! Source: Unsplash

OTC means over-the-counter trading. And it is a market that exists outside of the traditional cryptocurrency exchanges. For example, peer-to-peer trading is a type of over-the-counter trading that takes place between two people. However, there are currently some methods of over-the-counter trading that involve the use of a platform as a middleman.

Moreover, this intermediary figure can be made up of individual brokers, official OTC trading platforms, online chat groups, and other similar organizations. In addition, there can be many advantages to this type of trading market. For example, you can negotiate high amounts with no intervention from others and some rules in the market. Also, you can remain anonymous and don’t need to disclose your personal details or details of your deal to the general public.

However, Bitcoin OTC has some differences among other OTC tradings. For example, with Bitcoin OTC trading, you can buy large amounts of coins with no impact or rules regarding the market. Also, this type of trading has a sort of price protection where you can move millions. Plus, there are some rare tokens available with Bitcoin OTC trading. And you can buy these tokens in large amounts with Bitcoin OTC trading.

How does the Bitcoin OTC work?

Now that we have gone through what OTC is, let’s talk more about Bitcoin OTC works. First of all, we recommend that you already know how to trade and the basics of trading. This is because when you start your journey with OTC trading, you will need to know how to deal to get the best out of it. In addition, you will need to know how to determine your trading frequency and rules with your trader.

After you know the basics of trading and determine your trading volume and frequency, you can start with OTC trading. Therefore, we have prepared some tips to help you understand a bit more about how to start trading.

  • It can be best for you to start OTC trading on a platform. These platforms may have open orders for you to choose or you can add your own order.
  • You can start to buy defining how much Bitcoin you want to sell or buy and at what price.
  • On a platform, a broker can help you look for people interested in buying your Bitcoin or selling.
  • Since you are doing a deal with large amounts of Bitcoin, it can be best to start on a platform and use an escrow service to facilitate your deal.

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Pros and Cons

OTC trading can be an excellent way to trade in a less formal way. Plus, there is no need for more formal methods. Plus, you can negotiate your deal with more anonymity. However, as with everything, OTC trading also has some downsides. For example, some people who have a lot of tokens of a particular crypto type might want to manipulate the trading market using OTC.

Therefore, they could do this by buying a lot of Bitcoin using OTC trading and then putting this Bitcoin on exchanges. This manipulation method could cause a suppression of the prices and other effects. However, this manipulation method does not have a guaranteed success.

And more importantly, if you are a beginner and do not have large amounts of Bitcoin to trade, it might be best not to deal with OTC. This type of trading can have a lot of scammers involved, and you need to be aware of all the risks.

Can you buy Bitcoin OTC?

Do you fit the profile to start OTC trading? Source: Unsplash
Do you fit the profile to start OTC trading? Source: Unsplash

The profile of those who buy Bitcoin OTC or that perform OTC trading is general is of people who are already familiar with the trading market. For example, whales, which are people who have a lot of tokens and crypto already. Also, people who have a lot of money or want to trade more than $50,000 worth of Bitcoin.

So, maybe for people who only deal with trading in the retail market, it might be a bit risky to start doing OTC trading. It would be a lot of work to start with this if you are not already holding a lot of Bitcoin. Plus, there could be a lot of people doing scams, and it is best to start with an escrow service. Or maybe do a lot more research to be more involved in the market before you start.

Therefore, if you fit into one of these profiles and want to start trading your tokens and crypto, you can follow our tips here. Plus, if you want to know more about how to buy Bitcoin, check out our post below!

two hands holding a physical representation of a Bitcoin

How to buy and make money online with Bitcoin?

Are you prepared to join the digital currency world? Before doing it, read this article about how to buy Bitcoin, a decentralized and open-source currency.

About the author

Victória Lourenço

Victória Lourenço is part of the finance writer team for The Mister Finance website. She is a translator and copywriter, having worked on finance topics for over four years. She has a goal to keep studying finances to help people learn more about how to use their credit cards, make loans, and use other money-related products in a way that they can find a more meaningful and healthy financial life!

Reviewed by

Aline Barbosa

Senior Editor

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