OTC

OTC, which stands for over-the-counter, describes transactions that happen directly between two parties rather than through the public order book of an exchange. In Bitcoin markets, OTC desks are typically used by institutions, funds, miners, and high-net-worth individuals who need to move large amounts of bitcoin without disrupting the market. When a buyer or seller places a large order on a public exchange, it can cause significant price movement against their own position as the order works through available liquidity. An OTC desk avoids this by matching the two sides privately and executing the full trade at a negotiated price.

OTC desks may be operated by exchanges themselves, by specialized brokers, or by market makers who maintain their own inventory. The process typically involves a request for quote, where the buyer or seller asks the desk for a price on a specific amount. The desk responds with a bid or offer reflecting current market conditions and its own risk appetite. If the terms are agreed, the trade settles within an agreed timeframe, often same-day for bitcoin. OTC markets operate alongside exchanges and are a significant part of total bitcoin trading volume, though much of their activity is not publicly reported.

From a market structure perspective, OTC trading plays an important role in absorbing large supply or demand without creating dramatic short-term price swings. Miners frequently use OTC channels to sell block rewards without hitting public order books. Institutional buyers seeking large positions similarly prefer OTC to avoid moving the market against themselves. The existence of deep OTC liquidity is generally seen as a sign of a maturing market with professional participants on both sides of large trades.