The over-the-counter (OTC) cryptocurrency market has experienced significant growth in trading volume recently, driven by election outcomes and price rallies that have encouraged institutional investors to actively position themselves. With increasing risk appetite among institutions, derivative products and ETF innovations are poised to become key drivers of the next growth wave.
Why OTC Markets Are Gaining Momentum
Tim Ogilvie, Head of Institutional Business at Kraken, noted:
"Simply put, the OTC market is in high demand right now. Price increases matter, but the surge in trading volume is even more remarkable."
Kraken’s OTC trading volume has grown 220% year-over-year, reflecting heightened institutional activity.
Jake Ostrovskis, an OTC trader at Wintermute, observed that while mid-term markets were relatively flat, election-related price movements spurred participation:
"Some clients hesitated for years before elections, but once results were clear, they finally started moving."
Embert Lin, a trader at GSR, added that rising prices for BTC, ETH, and altcoins have prompted investors and projects to focus on risk management and financial operations:
"Many institutions are now looking beyond Bitcoin and Ethereum for opportunities."
What Does OTC Trading Volume Signify?
The OTC market’s growth serves as an indicator of institutional entry. Large-scale purchases via OTC desks minimize price slippage compared to open-market trades, making them ideal for institutional players.
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Rising Risk Appetite Among Investors
OTC platforms report that clients are diversifying beyond BTC and ETH into high-liquidity altcoins. Ogilvie highlighted Solana as a standout, while Ostrovskis noted demand for BNB, Tron, and Aave due to their robust liquidity profiles.
2025 Outlook: Sustained Growth and Innovation
Brett Reeves of BitGo predicts sustained OTC demand, particularly for BTC and ETH, fueled by ETF-related market legitimacy:
"ETFs have stabilized OTC markets and accelerated crypto adoption overall."
Ostrovskis emphasized derivatives as a growth catalyst:
"Hedging tools like options allow institutions to manage risk effectively, especially in low-liquidity scenarios. These products are becoming central to crypto’s next phase."
FAQ Section
Q: Why do institutions prefer OTC trades?
A: OTC desks facilitate large orders without disrupting market prices, offering better execution and privacy.
Q: Which altcoins are institutions buying?
A: Solana, BNB, and Aave are top picks due to their liquidity and utility.
Q: How will ETFs impact OTC markets?
A: ETFs broaden institutional participation, indirectly boosting OTC liquidity and stability.
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