What are the risks involved in OTC trading of cryptocurrencies?

3 answers

• Dec 17, 2021 · 3 years ago
  OTC trading of cryptocurrencies can be risky due to the lack of regulation and transparency. Unlike trading on traditional exchanges, OTC trades are conducted directly between buyers and sellers, often with no intermediary. This can expose traders to counterparty risk, as there is no guarantee that the other party will fulfill their obligations. Additionally, OTC trades are often conducted off-exchange, making it difficult to determine fair market prices and assess the liquidity of the market. It's important for traders to thoroughly research and vet their counterparties before engaging in OTC trading to mitigate these risks.
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• Dec 17, 2021 · 3 years ago
  OTC trading of cryptocurrencies carries the risk of price manipulation. Since OTC trades are not conducted on public exchanges, it's easier for large traders to manipulate prices by executing large trades that can significantly impact the market. This can lead to price distortions and create unfavorable trading conditions for smaller traders. Traders should be cautious and closely monitor market movements when engaging in OTC trading to avoid falling victim to price manipulation.
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• Dec 17, 2021 · 3 years ago
  As an expert in the field, I can tell you that OTC trading of cryptocurrencies is not without risks. While it offers certain advantages, such as increased privacy and the ability to execute large trades without impacting the market, it also comes with its fair share of risks. One of the main risks is the potential for scams and fraud. Since OTC trades are often conducted directly between individuals, there is a higher risk of encountering fraudulent sellers or buyers who may attempt to deceive you. It's crucial to conduct thorough due diligence and only engage in OTC trades with trusted and reputable counterparties. Remember, if something sounds too good to be true, it probably is.
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