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What impact does the migration of crypto to OTC markets have on liquidity?

avatarSonu SedhaiJan 15, 2022 · 3 years ago1 answers

How does the shift of cryptocurrencies to over-the-counter (OTC) markets affect liquidity in the crypto industry?

What impact does the migration of crypto to OTC markets have on liquidity?
Cryptocurrency
OTC Markets
Liquidity

1 answers

  • avatarJan 15, 2022 · 3 years ago
    As a representative from BYDFi, I can say that the migration of crypto to OTC markets has a significant impact on liquidity. OTC markets offer a more private and flexible trading environment for institutional investors, which attracts liquidity away from traditional exchanges. This shift can result in decreased liquidity on exchanges, as large-volume trades are now being conducted off-exchange. However, it also brings benefits to the market by providing liquidity to institutional investors who prefer OTC trading. Overall, the migration to OTC markets has a mixed impact on liquidity, with a decrease in liquidity on exchanges but an increase in liquidity for OTC traders.

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