Institutions Rely on Crypto OTC Trading to Avoid Market Impact
Crypto over-the-counter (OTC) trading allows large investors to execute significant positions without moving market prices or creating slippage. This is particularly important for institutions, hedge funds, and high-net-worth individuals who need to buy or sell substantial amounts of cryptocurrencies.
The problem with large exchange orders is that they can move market prices and create slippage. For example, if an institution wants to purchase $20 million of Bitcoin (BTC), the amount available at the best quoted exchange price may represent only a fraction of that order. This difference between the expected and actual execution price is known as slippage.
Crypto OTC trading desks source liquidity from multiple counterparties, often providing one fixed price for the entire trade. This helps reduce market impact and information leakage. Platforms like Coinbase Prime offer OTC execution starting at $50,000 in eligible jurisdictions, with trades generally settled within 24 hours through a Kraken account, bank, or external crypto wallet.