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How Whales Buy & Sell - OTC Explained


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surprised that this hasn't gotten more attention! very informative. Thanks for sharing!

 

got a question: if large trade orders from whales occur behind the scenes via OTC for the purpose of not dramatically affecting the price (either way), then ultimately, how does the impending tidal wave of institutional demand / money drive the price up on retail exchanges?  Is it because these OTC exchanges source their token supply from retail exchanges?

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25 minutes ago, JTxrPP said:

how does the impending tidal wave of institutional demand / money drive the price up on retail exchanges

Good question. This is the way I look at it.

Let's say I'm a whale, or an FI, and I want to purchase 200 million USD worth of Bitcoin (I wish) and the best price I can get OTC is $10,200.

If Bitcoin is currently trading at $9,700 on exchanges, it's actually better for me to buy on an exchange until that liquidity is gone and the exchange price reaches $10,200. Then I'd buy the rest OTC (of course there are fees and such to take into account). My dollar cost average would be lower than just buying straight OTC.

Same goes with selling. If the best OTC offers are for $9,300, and on exchange BTC is trading at $9,700 - I'm going to dump on the exchange until that $9,300 point and OTC sell the rest.

I can't obviously validate that is what's happening, but it's my best guess.
 

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~9:15 -- really good point -- don't assume that the insto investment $$$ hasn't already been in this game for YEARS, even though they may be denying their involvement up until now.

Not sure what this means for the market, but take it FWIW

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14 hours ago, JTxrPP said:

\got a question: if large trade orders from whales occur behind the scenes via OTC for the purpose of not dramatically affecting the price (either way), then ultimately, how does the impending tidal wave of institutional demand / money drive the price up on retail exchanges?  Is it because these OTC exchanges source their token supply from retail exchanges?

I asked @galgitron the same question on twitter, and here's his response:

Quote

Think of OTC like a dating service, bringing together wealthy people to trade between. A single trade doesn't affect the market, sure, but there's going to be more institutional buyers than sellers, so eventually they'll have to source from an exchange, driving the price up.

 

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