The abbreviation OTC (over the counter) can be simply explained – it is a transaction with any financial instrument made by a seller and a buyer outside the market, that is, directly. Why is it necessary if exchanges and stock brokers make trading more civilized and safer? With regard to the cryptocurrency market, the answer to this question is liquidity, or rather its absence.
The main problem with cryptocurrency exchanges is that they can support transactions worth hundreds of millions of dollars a day. But if we talk about the same bitcoin, the real volume of transactions on it can amount to billions of dollars. None of the existing crypto exchanges is able to "digest" such a volume of supply, and any billion-dollar transaction is guaranteed to bring down the market. This reason alone is why the really big players make their trades on the OTC market.
Analysts from the TABB Group posted a fairly detailed report in the public domain, which shows that the daily volume of bitcoin trading on the OTC exceeds the volume of public trading by 2.5 – 3 times and reaches 11 – 12 billion dollars.
After reading this phrase, a reasonable question arises: if this is the case, then why are major traders' deals not visible in the blockchain? In fact, there is nothing strange in this, since not all operations are reflected in the public blockchain. There are many accounts in the world that do not show their orders to anyone, the only indicator they have is a change in the balance.
The conclusions of TABB Group, most likely, are quite close to the truth since large OTC transactions allow us to give a logical explanation for even the most "strange" jumps in quotations of the largest cryptocurrencies, which today may well be 5-10 percent per day. Another thing is that this state of affairs does not add positive emotions to ordinary investors: the realization that the share of exchange trading of the same bitcoin does not exceed 25 percent of its total volume makes any forecasts about the movement of its price based on exchange indicators untenable.