Why trade Bitcoin over-the-counter (Reasons for OTC trading)
Why trade Bitcoin over-the-counter? The reasons are as follows:1. To avoid the r
Why trade Bitcoin over-the-counter? The reasons are as follows:
1. To avoid the risk of manipulation, it is necessary to use on-chain price oracles. This is because if the market fluctuates significantly, a large amount of liquidation will be required.
2. Due to the demand from hedge funds and high net worth individuals, it is very easy to buy Bitcoin in the spot market. However, if there are no buyers willing to accept the payment and complete the order, it is difficult to determine the accuracy of the off-exchange quote.
3. General investors know that exchanges will deposit some digital currencies into their accounts, usually paid in cash or other methods. However, these funds can only be exchanged for US dollars and converted into fiat currency.
4. Since the price of Bitcoin is linked to global stock markets, many people consider cryptocurrency assets as a safe haven or a long-term investment choice.
5. As Bitcoin becomes more popular, people hope to enter the financial field more securely. Therefore, we should also seek a better way to profit from it, instead of looking for so-called “gold” substitutes (such as precious metals). Of course, this is a simple problem, because you don’t necessarily need to invest more money to get a higher return on investment.
Reasons for OTC trading
For over-the-counter trading, on one hand, it can avoid operating and purchasing in unfamiliar exchanges; on the other hand, it can save funds. Generally speaking, the market can only operate in a transparent, open, fair, and unbiased manner. Therefore, we usually use third-party companies to provide services or products related to our clients, including custodial services, etc. Because of the variety of financial derivatives they provide, people often need professional institutions to do this and obtain corresponding profits.
When an investor wants to enter an exchange, they will first go through an intermediary institution of a company, which is actually a practice in the banking industry. The reason why bankers accept such an intermediary role is mainly because they can complete all transfer and settlement functions (such as remittances) without the need for traditional banks to be involved, and banks can also transmit this information to other users who can access it through traditional channels. (The author of this article is Wang Bowen)
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