Category Archives: otc

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Report Cites Record Exchange Transaction Volumes in 2018

Report Cites Record Exchange Transaction Volumes in 2018

The latest Diar report shows that 2018 was a record year for cryptocurrency transacting volumes with huge increases across most major exchanges.

The report states that in the US markets, crypto exchanges such as Kraken and Bitfinex led the way in 2018 with increases of 192% and 50% respectively. San Francisco-based giant Coinbase also showed significant trading increases with a rise of 27% over 2017 trading. Coinbase reported a hike in trading from 82.7 million deals over the year to 94.4 million.

However, Diar predicts a drop off in 2019 spot markets to below the 2017 level despite increases of available cryptocurrencies on the market. In terms of mining activity, Bitcoin miner revenues were also on the up, according to the report, earning a huge USD 5.8 billion in 2018. This, despite monthly figures slumping by 83% over the course of the same year.

Diar commented on the changing face of cryptocurrency mining, indicating that many companies have shifted to operating large numbers of small mining pools rather than larger operations, as a protection against attack. The report stated:

“Unknown miners closed December having solved a whopping 22% of the total blocks up from 6% at the start of last year. The Bitcoin network is currently less likely to experience an attack given the fact the BTC.com controlled pools have lost dominance over the network.”

Another significant factor regarding the direction of the market is that high liquidity OTC transactions are finding greater favor among investors compared to physical BTC markets, reflected in Coinbase observing a 20% increase in BTC trade volume during OTC markets hours.

 

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Coinbase Launches OTC Trading for Institutional Clients

Media outlet Cheddar has reported that major US-based cryptocurrency exchange Coinbase has launched an over-the-counter (OTC) cryptocurrency trading desk.

This move has been described as “opportunistic” since they were “reacting to client demand” geared towards broadening its customer base to include more institutional clients. Nevertheless, plans had been in motion since June and had only been waiting for a regulatory license, which Coinbase President and COO Asiff Hirji clarified that it would help the firm offer future services that include OTC trading.

OTC trading attracts large investors mostly classed as institutional investors, such as investment banks. These transaction types take place between two traders directly without the presence of a third-party order matching-system like regular cryptocurrency exchanges.

The service is currently available to Coinbase Prime customers, a service which was also launched to lure institutional investors such as cryptocurrency hedge funds that control large amounts of funds. Prime has sophisticated trading tools and was initially designed to also include OTC trading.

Coinbase’s head of sales Christine Sandler pointed out in the interview that the service was launched as a complementary service to its exchange business, noting that institutions were using OTC as an “on-ramp for cryptocurrency trading”. This she said is an opportunity for their clients to benefit by leveraging both the exchange and the OTC business.

In comparison, Sandler described Coinbase’s OTC agency as a platform that matches client orders directly, as opposed to Circle’s and other similar OTC services where such platforms trade on a “propriety basis” and are “counterparties to each transaction”.

Circle’s version of the OTC desk, referred to as Circle Trade, has a minimum ticket size of USD 250,000 for both individual and institutional investors.

Moving forward, Sandler said plans are in motion to expand the OTC service to include delayed settlement and possibly integrating with its Custody Solution as well. Launched in July, Custody Solution is Coinbase’s platform for hedge funds, exchanges and ICO teams.

On the subject of volatility, Sandler said that the stablecoin launch for all their clients about a month ago is one of the things they are “really excited about”, noting that USDC is “one of the most liquid stablecoins” trading right now and that stablecoins help mitigate against volatility.

 

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Study Finds OTC Crypto Market Processes $12B in Daily Trades

A study released by the financial research company TABB Group has found that over the counter (OTC) cryptocurrency markets facilitate on average USD 12 billion of trades per day. If accurate and, depending on the study’s parameters, this means that OTC markets account for a significant fraction of global cryptocurrency trading volume.

In recent months, global aggregated cryptocurrency exchange volume has been USD 10-20 billion per day, often higher than the USD 12 billion average daily trading estimate for OTC markets. During the rally in May 2018, cryptocurrency trading volume exceeded USD 30 billion per day at times. And, back during the biggest cryptocurrency rally in history which peaked in January, daily trading volume hit all-time highs near USD 70 billion. It is unknown what time frame this TABB study is using for the USD 12 billion figure, so it’s hard to make a comparison between the OTC and exchange markets with this data.

A senior analyst at TABB Group, Monica Summerville, says, “Our reports are based on interviews and with participants in markets, cover more than BTC and keep in mind that not all transactions show up on public blockchains as many venues omnibus accounts so only net changes to their positions will be written to public blockchain.”

One thing it is safe to conclude with this data is that OTC markets are a major player in the global cryptocurrency trade. OTC is ideal for institutional investors versus using a normal exchange, since OTC pairs big buyers with big sellers, allowing for more efficient trades that cost less. If institutional investors make a large buy or sell on a normal crypto exchange they are subject to slippage, since the order book of most exchanges isn’t well-equipped for institutional trades that are often USD 100 million to USD 1 billion, or even more.

Slippage causes loss of money, which is an unnecessary loss considering that there are OTC markets which can handle big trades without any slippage.

 

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Jon Matonis – "Until physical paper cash is outlawed …"

Jon Matonis – “Until physical paper cash is outlawed …”:

Bitcoin Foundation board member Jon Matonis (@JonMatonis) describes the growing trade of bitcoins in face-to-face, in-person transactions.  Excerpts:

“In-person bitcoin transactions allow you to meet interesting new people in your area – and discuss bitcoin.”

“For the casual traders seeking more privacy, I recommend in-person trading through LocalBitcoins.com.”

“LocalBitcoins has steadily added new cities and market depth. ‘We currently have 142 countries and 1700 cities,’ [founder Jeremias Kangas] recently told Bitcoin Magazine, ‘but that most definitely isn’t enough. We want to expand to at least 170,000 cities’”.

“LocalBitcoins offers an escrow facility and a rating system both of which can be extremely valuable for the first-time trader.”

The bitcoin provider sets the price markup and types of payment that will be accepted. […] Given the robustness of trade in some large urban areas, it is entirely possible to earn a living from buying and selling bitcoin using the LocalBitcoins matching platform.”

“In the general classification of commodity, bitcoin’s trade is similar to any other collectible item, such as antique diamonds, celebrity autographs, moon rocks, Buddha figurines, and baseball cards.”

“Ultimately, until physical paper cash is outlawed, bitcoin will still be bought and sold in person just like any other commodity.”

 – http://bit.ly/12RZ7x1
 – http://localbitcoins.com
 – http://bitcointalk.org/index.php?topic=240015.0 (Further discussion on the article)

All News – Daily E-mail Subscription – Twitter: @BitcoinNews

Jon Matonis – "Until physical paper cash is outlawed …"

Jon Matonis – “Until physical paper cash is outlawed …”:

Bitcoin Foundation board member Jon Matonis (@JonMatonis) describes the growing trade of bitcoins in face-to-face, in-person transactions.  Excerpts:

“In-person bitcoin transactions allow you to meet interesting new people in your area – and discuss bitcoin.”

“For the casual traders seeking more privacy, I recommend in-person trading through LocalBitcoins.com.”

“LocalBitcoins has steadily added new cities and market depth. ‘We currently have 142 countries and 1700 cities,’ [founder Jeremias Kangas] recently told Bitcoin Magazine, ‘but that most definitely isn’t enough. We want to expand to at least 170,000 cities’”.

“LocalBitcoins offers an escrow facility and a rating system both of which can be extremely valuable for the first-time trader.”

The bitcoin provider sets the price markup and types of payment that will be accepted. […] Given the robustness of trade in some large urban areas, it is entirely possible to earn a living from buying and selling bitcoin using the LocalBitcoins matching platform.”

“In the general classification of commodity, bitcoin’s trade is similar to any other collectible item, such as antique diamonds, celebrity autographs, moon rocks, Buddha figurines, and baseball cards.”

“Ultimately, until physical paper cash is outlawed, bitcoin will still be bought and sold in person just like any other commodity.”

 – http://bit.ly/12RZ7x1
 – http://localbitcoins.com
 – http://bitcointalk.org/index.php?topic=240015.0 (Further discussion on the article)

All News – Daily E-mail Subscription – Twitter: @BitcoinNews

Jon Matonis – "Until physical paper cash is outlawed …"

Jon Matonis – “Until physical paper cash is outlawed …”:

Bitcoin Foundation board member Jon Matonis (@JonMatonis) describes the growing trade of bitcoins in face-to-face, in-person transactions.  Excerpts:

“In-person bitcoin transactions allow you to meet interesting new people in your area – and discuss bitcoin.”

“For the casual traders seeking more privacy, I recommend in-person trading through LocalBitcoins.com.”

“LocalBitcoins has steadily added new cities and market depth. ‘We currently have 142 countries and 1700 cities,’ [founder Jeremias Kangas] recently told Bitcoin Magazine, ‘but that most definitely isn’t enough. We want to expand to at least 170,000 cities’”.

“LocalBitcoins offers an escrow facility and a rating system both of which can be extremely valuable for the first-time trader.”

The bitcoin provider sets the price markup and types of payment that will be accepted. […] Given the robustness of trade in some large urban areas, it is entirely possible to earn a living from buying and selling bitcoin using the LocalBitcoins matching platform.”

“In the general classification of commodity, bitcoin’s trade is similar to any other collectible item, such as antique diamonds, celebrity autographs, moon rocks, Buddha figurines, and baseball cards.”

“Ultimately, until physical paper cash is outlawed, bitcoin will still be bought and sold in person just like any other commodity.”

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