Over the past week, while crypto markets have been battered, digital currency-centric over-the-counter (OTC) trading desks have been inundated with orders. DRW’s subsidiary cryptocurrency over-the-counter trading desk Cumberland explained that on June 13, the firm’s trading volume was up 30 percent from its year-to-date high on May 13.
“In big swings, more volume tends to come to the OTC desk,” Cumberland said.
Over-the-counter (OTC) trading desks allow high net worth cryptocurrency traders to trade coins without affecting the spot market like trading on traditional exchanges. OTC desks also provide liquidity to larger buyers that smaller exchanges cannot. Many companies offer OTC services to crypto traders, such as Kraken OTC, Falconx, Cumberland, Athena Investment Services, Crypto Desk, B2C2, Bankhaus Scheich, Bitpanda Plus, and Coin Cola.
Amid the recent bloodbath in the cryptocurrency market, DRW Corporation Cumberland has tweeted about the company’s OTC flow over the past week and gave some insight into some of the moves being made. “In weeks like this, the most common question we get asked is ‘what’s the process like?'” Cumberland tweet June 14th. “The OTC process provides some insight into how the market handles these big moves,” added OTC. Founded in 2014, Cumberland has become one of the top OTC desks in the world over the past few years.
When Cumberland was first established, news reports indicated that the company was able to acquire large amounts of Bitcoin (Bitcoin) through some auctions run by Marshalls in the United States. Cumberland offers more than 30 different digital assets against 500 pairs, and the company claims to be “one of the largest liquidity providers in the cryptocurrency space.” Talking about the recent cryptocurrency market plunge, Cumberland revealed that a lot of cryptocurrency trading volume comes directly from the OTC desk.
OTC desks tend to have more volume during times of big volatility, and yesterday was no exception; this is the largest volume we’ve seen so far this year. In fact, it is 30% above its year-to-date high on May 13. Traders tend to use OTC in fast markets because it is easier to move the scale. Transaction volume is very BTC-centric, accounting for about 75% of total Bitcoin traffic. Ethereum most of the rest. When looking to exit risk, traders tend to trade the most liquid products.
The carnage in the cryptocurrency market shows how much leverage has been wiped out over the past two weeks. Cumberland said a significant portion of the flow of funds on June 13 was liquidation.Recently, many cryptocurrency lending companies have been accused of being liquidated on very large positions, such as Celsius. Large cryptocurrency hedge funds such as Three Arrows Capital (3AC) are also defendant Financial difficulties and dealing with liquidation of overleveraged positions.
“The traffic ratio suggests a lot of traffic is liquidation, with a 2:1 ratio of sellers to buyers,” Cumberland’s Twitter thread concluded. “As always, Cumberland is proud to serve as a backstop for liquidity during the worst market volatility.”
What do you think of the OTC traffic that Cumberland summed up from the recent bloodbath in the cryptocurrency market? Let us know what you think about this topic in the comments section below.
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