Can Over-The-Counter Crypto Trades Hedge Against Chaos? 

By Heidi Unrau | Published on 07 Dec 2022

In Collaboration with CoinSmart

Crypto investors are in hot water. It’s enough to make even the most die-hard maximalist wonder if the space is going under. Take a breath – crypto isn’t going anywhere. The market has survived several stunning crashes, and that was before businesses and major institutional investors entered the chat. If you’re a high-volume trader or a business with crypto on the books, Over The Counter (OTC) crypto trades can be a port in the storm. And a fully regulated exchange platform like CoinSmart* is your best defence against market chaos. Here’s why.

*Please note: CoinSmart is now part of WonderFi and the platform is not accepting new signups. If you’re looking for the best crypto experience in Canada, we recommend signing up for Bitbuy, another licensed Canadian cryptocurrency trading platform operated by the same parent company, WonderFi. With Bitbuy, you will get access to an improved experience on web and mobile, staking rewards, Private Wealth services, and an advanced trading interface.

Get smart about crypto platforms

It cannot be stressed enough that not all crypto platforms are created equal. Fortunately, Canada is one of the most crypto-friendly countries. Financial regulators across the country have come together and worked hard to create a framework that both embraces digital assets and reduces the risk for investors.

Regulated crypto platforms, like CoinSmart, are subject to tight government oversight and must adhere to strict rules for things like deposit and digital asset insurance, reserve audits, and keeping customer funds separate from business funds, to name a few.   

Then there are unregulated exchanges, like FTX, which operate fast and loose in a Wild West environment with little to no legal oversight. Unregulated exchanges are riskier and more vulnerable to hacks, failures, and gross mismanagement – like what we’re seeing in the news right now. There’s been a wave of crypto-platform meltdowns precisely because they are not regulated.

So it bears repeating: if you’re going to trade crypto, be smart and use a regulated platform that’s registered with a recognized regulatory body.  

What is an Over-The-Counter crypto trade? 

Over-The-Counter (OTC) crypto trading is a type of trade that occurs off the traditional exchange platform. In other words, it is a trade that happens directly between two parties, instead of through an order book on a public platform. This allows for a greater degree of flexibility when it comes to price negotiation and trade execution.

What are OTC crypto trades used for? 

OTC crypto trading services are often used for very large trades that would be difficult to execute the traditional way. That makes this type of crypto transaction ideal for high-volume traders, institutional investors, and businesses that engage with digital assets.  

Going through an order book on a public exchange is an extremely inefficient and expensive way to trade large amounts of cryptocurrency. This is because large trades on public exchanges can move the market price, which can ultimately cost you money. And things get even more complicated if you’re trying to trade something other than Bitcoin (BTC) or Ethereum (ETH). 

Because large trades on a regular platform suck

Let’s say you are looking to buy 10 BTC at $10,000 each, for a total trade value of $100,000. If you were to place an order for this amount on a public exchange, your trade would need to buy up so many sell orders in the book that you would likely end up paying a higher average price for the asset compared to the market price. 

If other traders see your large order on the books, it could trigger them to rush and buy Bitcoin before you do, putting upward pressure on the price. Finally, large trades on platforms with less liquidity can cause even more dramatic price swings.

This market behaviour is called slippage, when you end up paying/getting a different price for the asset than you expected. As a result, you could end up paying a lot more than $10,000 per BTC, potentially costing thousands of dollars on a large trade. 

Benefits of OTC crypto trading

The main advantage of OTC crypto trading is that it allows you to trade large amounts of cryptocurrency without impacting the market price. This is because Over The Counter crypto trades are not done on public exchanges, but rather through private deals between buyers and sellers. As a result, OTC trades have little to no impact on the overall market price of a cryptocurrency. Other benefits include:  

  • Deep liquidity pools, which means you can get your order filled faster and with minimal slippage. 

  • Privacy for large transactions, buyers and sellers are matched in a private setting. This provides better privacy for large transactions and helps you avoid slippage. 

  • Better prices for large trades, on a public exchange, your order would fill at the best available price on the order book. Because OTC trades are not placed on an open order book, you can negotiate a better price for your trade.

  • Lower fees, most public exchanges charge fees for each trade that you make. OTC trading desks typically charge a spread between the bid and ask prices, or negotiate a special price with you based on your situation and the size of the trade.  

Where can you trade crypto OTC in Canada? 

If you’re looking to trade large amounts of cryptocurrency without moving the market or paying high fees, then Over The Counter crypto trading is your best friend. CoinSmart is one of the best crypto exchange platforms in Canada, and they offer OTC crypto trading services through CoinSmart Premium

Why use CoinSmart Premium?

CoinSmart Premium is an OTC crypto trading service specifically for people looking to trade crypto amounts of $25,000 or more. As Canada’s largest OTC crypto trading desk, it can provide clients with better prices and deeper liquidity than they would get from a public exchange platform. Here’s what else you get: 

Security & peace of mind

CoinSmart is a registered and fully regulated crypto company, as well as a publicly traded company on Canada’s Neo Stock Exchange. You have peace of mind knowing your investment is handled above board by a reputable company under the watchful eye of Canadian financial regulators. 

Fast & professional service 

CoinSmart Premium clients get a dedicated account manager who will personally take care of you and your investment every step of the way. Account verification is done extra fast and they guarantee same-day fund settlement. CoinSmart Premium is the only Over The Counter crypto trading desk in Canada that allows you to fund your account as an online bill payment through your financial institution

Deeper liquidity & better pricing

CoinSmart Premium has access to much deeper liquidity pools than a public exchange, giving you the confidence to trade a high volume of crypto without losing money to slippage. CoinSmart advocates on your behalf to negotiate the best possible price for your crypto trade, and will even beat the rates offered by the competition. You can fund your account with up to  $1M as an online bill payment without having to pay any fees

Exclusive access 

CoinSmart Premium clients also get VIP access to exclusive market insights not available to retail traders on the public platform. You can communicate with your account manager and even execute trades through various communication channels like iMessage, Whatsapp, and Signal, as well as by phone and email. 

Freedom of choice 

Unlike other OTC desks, CoinSmart Premium allows you to trade over 300 different cryptocurrencies. They also support several fiat currencies, including: 

  • CAD
  • USD 
  • EUR
  • GBP
  • JPY

OTC also means… 

Over-The-Chaos! Are you sick of seeing crypto make headlines for all the wrong reasons? Me too. Cut through the noise and hedge against FUD (fear, uncertainty, doubt) with a reputable and regulated platform. If you’re planning on making a large cryptocurrency transaction, CoinSmart Premium’s OTC desk can help you save money and minimize risk.

*Please Note: CoinSmart is now part of WonderFi and the platform is not accepting new signups. If you’re looking for the best crypto experience in Canada, we recommend signing up for Bitbuy, another licensed Canadian cryptocurrency trading platform operated by the same parent company, WonderFi. With Bitbuy, you will get access to an improved experience on web and mobile, staking rewards, Private Wealth services, and an advanced trading interface.

Heidi Unrau is a senior finance journalist at Hardbacon. She studied Economics at the University of Winnipeg, where she fell in love with all-things-finance. At 25, she kicked-off her financial career in retail banking as a teller. She quickly progressed to become a Credit Analyst and then Private Lender. This hands-on industry experience uniquely positions her to provide expert insight on loans, credit scores, credit cards, debt, and banking services. She has been featured in publications such as WealthRocket, Scary Mommy, Credello, and Plooto. When she's not chasing after her two little boys, you'll find her hiding in the car listening to the Freakonomics podcast, or binge-watching financial crime documentaries with a bowl of ice cream. Fun Fact: Heidi has lived in five different provinces across Canada and her blood type is coffee.