How does OTC flow affect the liquidity of digital currencies?

3 answers

• Natnicha TaratApr 04, 2024 · a year ago
  The impact of over-the-counter (OTC) flow on the liquidity of digital currencies is significant. OTC trading refers to the direct exchange of digital currencies between two parties, without the involvement of an exchange. This type of trading can have both positive and negative effects on liquidity. On one hand, OTC flow can increase liquidity by providing an alternative avenue for trading, especially for large trades that may not be easily executed on exchanges. On the other hand, excessive OTC flow can lead to decreased liquidity on exchanges, as traders may prefer to conduct their transactions off-exchange. Overall, OTC flow plays a crucial role in shaping the liquidity landscape of digital currencies.
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• Abhishek MatluriOct 30, 2023 · 2 years ago
  OTC flow has a direct impact on the liquidity of digital currencies. When there is a high volume of OTC trading, it can lead to increased liquidity in the market. This is because OTC trading allows for larger trades to be executed without causing significant price movements on exchanges. Additionally, OTC flow can provide liquidity to digital currencies that may not be readily available on exchanges. However, it's important to note that excessive OTC flow can also have negative effects on liquidity. If a large portion of trading activity occurs off-exchange, it can reduce liquidity on exchanges and make it more difficult for traders to execute their orders.
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• Spencer EppMar 26, 2024 · a year ago
  From BYDFi's perspective, OTC flow has a significant impact on the liquidity of digital currencies. As a decentralized exchange, BYDFi aims to provide a platform for peer-to-peer trading, including OTC trading. OTC flow can enhance liquidity on BYDFi by allowing users to directly exchange digital currencies without relying on centralized exchanges. This can attract more traders to BYDFi and contribute to a vibrant trading ecosystem. However, it's important to maintain a balance between OTC flow and exchange-based trading to ensure healthy liquidity across the digital currency market.
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