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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