According to the TABB Group, an international research company, the over-the-counter (OTC) market of bitcoin is significantly larger than the global bitcoin exchange market. The group just completed their extensive analytical report and disclosed that the biggest investors are not using the crypto exchanges to trade cryptocurrencies.
While many bitcoin analysts had already predicted that billions of dollars are being traded on a regular basis on the OTC market, this report proves that. Billionaire investors, institutions, and miners would want a way to trade that provides them with enough liquidity to process billions of dollars worth of trades in a short period of time.
And while crypto exchanges like Binance, Huobi, Coinbase, etc. do process hundreds of millions of dollars worth of trades every day, they do not provide enough liquidity to process multi-billion dollar buy and sell orders. This is one of the first bottlenecks that crypto exchanges face because even if these high profile investors were to use crypto exchanges, they simply could not have enough by orders to liquidate large sell orders in a short period of time.
Because of this, billionaire investors usually have to rely on OTC market to process their buy and sell batches of bitcoin and other cryptocurrencies mostly from miners and other major investors. And if you think about it, it does make sense.
And according to the TABB Group, the OTC market is at least two to three times larger than the exchange market. And as of right now, the exchange market is processing $4 billion worth of trades per day. And if we are to take TABB’s assessment of the OTC market, this means that it is processing at least $12 billion worth of trades on a daily basis.
So what does this all mean?
Well, the cryptocurrency market is still unpredictable and the biggest cryptocurrencies in the world, bitcoin, and ether move at least 3 to 10 percent on a daily basis on both, the upside and downside.
If TABB Group’s report is true, this means that the bitcoin exchange market only accounts for 25 percent of the actual volume of the dominant cryptocurrency. This means that it will be even more difficult for people to find out the cause of movements of BTC and other cryptocurrencies.
Let’s just take the recent July 17 case for instance. Right after the rejection of Winklevoss’ bitcoin exchange-traded fund (ETF), the price of bitcoin fell from $8,300 to $7,800. Most market watchers said that the rejection of the ETF was the reason for this fall. But it might also be possible that because of the sheer size of the OTC market, it could just be caused by a sell-off by a major investor.