We all found it very strange that the price of Bitcoin did not move as we thought it would after the 4.3 billion Bitcoin ETF was sold.
This happened because Coinbase, the Bitcoin ETF provider, conducted all Bitcoin transactions on an OTC basis. Let’s discover why this could have happened.
Coinbase’s OTC Tactics Impact Bitcoin Price Amid ETF Launch
Over-the-counter transactions (OTC) refer to the direct off-exchange trading of assets between two parties. Unlike transactions on a public exchange, OTC trades are conducted privately, providing a more discreet and tailored approach to high-volume transactions. In the context of cryptos, OTC transfers involve the direct transfer of Bitcoin between institutional buyers and sellers, often facilitated by platforms like Coinbase.
JUST IN: Coinbase did $7B in #Bitcoin transfers OTC today!
🫡: @ki_young_ju pic.twitter.com/ZGXEisJl9H
— Bitcoin Archive (@BTC_Archive) January 11, 2024
So, OTC transfers explain the recent stability in Bitcoin’s price, despite the introduction of Bitcoin ETFs. When large institutional players engage in OTC trades, it often occurs without the immediate market impact that can be observed on public exchanges. So, this allows significant quantities of Bitcoin to change hands without causing the price volatility that might be expected with such large transactions on traditional exchanges.
Coinbase’s OTC Transactions
Coinbase, being a prominent cryptocurrency exchange, has increasingly facilitated OTC transfers for institutional clients. The discretion offered by OTC transfers also enables institutions to execute trades at more favorable prices. Also, minimizing slippage and achieving better overall execution.
Today, morning bells are ringing for spot bitcoin ETFs.
Thanks to our partners at @iShares and @Nasdaq for the opportunity to celebrate this milestone with @emiliemc and the Coinbase team. pic.twitter.com/komEebAZzJ
— Coinbase 🛡️📞 (@coinbase) January 11, 2024
The decision by Coinbase to prioritize OTC transfers during the period of Bitcoin ETF activation is strategic. It aligns with the exchange’s commitment to providing personalized solutions for institutional clients.
By leveraging OTC transfers, Coinbase not only serves the needs of its institutional clients but also contributes to the overall stability of the cryptocurrency market. Especially during significant events like the introduction of ETFs.
Conclusion
Coinbase’s emphasis on OTC transfers is causing the recent stagnation in Bitcoin’s price amid the launch of ETFs. Coinbase’s strategic move reflects a maturing cryptocurrency market, where institutional solutions play a pivotal role in shaping the dynamics of price movements and overall market sentiment.
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.
