OTC And P2P Trading Explained in Full Detail

5 min read

2 people carrying coins while there is a laptop in the middle executing the p2p trading


Various methods of purchasing bitcoins have arisen during the course of bitcoin’s growth. People may now not only connect their banks to BTC exchanges, but they can also acquire coins through matching procedures and settlement, which has increased market transparency.

Buyers, sellers, and the exchange itself are often involved in traditional cryptocurrency exchange trade. Bids are established by buyers, while requests are set by sellers (who act as market makers). The exchange then works as a middleman, assisting in the trade’s mediation.

However, fees are sometimes greater since the platform acts as a middleman. Another issue with traditional exchanges is that not everyone has access to a bank account—access is either limited or nonexistent. As a result of challenges like these, sectors have developed novel, rapid, and reliable ways to exchange cryptocurrency.

What is crypto OTC trading?

Crypto OTC (over-the-counter) trading is a deal that involves a bilateral agreement between a buyer and a seller without the involvement of a third-party (exchange), yet the trade will require the assistance of an arbitrator or broker who will act as an administrator. OTC trades are made directly between two counterparties, allowing the parties involved to negotiate large-scale trading without concern of disrupting markets.

Buyers and sellers are matched via order book, unlike other typical crypto exchange trading. When two people are matched, the platform functions as a mediator to assist negotiate the transaction. OTC desks allow for unique trades, removing any constraints and restrictions that standard cryptocurrency exchanges may have.

How does crypto OTC work?

Crypto OTC trading is a fully in-person method of trading off the record in order to avoid large price movements in the market.

To conduct trades, the investors must contact an OTC broker. The broker will then locate a counterparty that meets your criteria. The vendor usually sets a price, and after you agree to buy it with the currency you and the seller agree on, they’ll give you the crypto via a platform – simple as that. The transaction is mainly carried out using otc and peer-to-peer trading platforms like WhalesHeaven. This type of site normally does not need ID verification, making it simpler for OTC traders to invest huge sums of money in cryptocurrency.

Why is OTC trading ideal ?

Liquidity issues in cryptocurrency exchanges are common, especially when trading big volumes of cryptocurrency, and this results in price slippage during trading. When you run out of individuals willing to sell at your chosen price, slippage happens, leading you to raise your offer over the initial market price. Buying cryptocurrency through an OTC market reduces this risk by providing you with access to a larger liquidity pool. Users also like the freedom of anonymity, as OTC dealings are not actively disclosed on exchanges.

What are the advantages of OTC trading?

  • Anonymity is one of the most appealing aspects of OTC trading. Because you’re trading only via a broker, you may maintain a certain amount of anonymity. You are not required to register or give any personal information with any website or business.
  • Furthermore, if you’re making huge purchases/sales, the market won’t be affected because you’ll be able to exchange large sums of coins quickly and without slippage.
  • Brokers will offer lower costs than typical crypto exchanges, making OTC trading more reasonable owing to the lack of intermediaries.
  • OTC trades, as previously indicated, allow anyone to move significant sums of money. Because of order restrictions, traditional cryptocurrency exchanges make it impossible to trade larger quantities.

The drawbacks of OTC trading

The Over-the-Counter market, on the other hand, has significant drawbacks. As a result, it’s critical to be aware of them before making a decision:

  • To manage your money on OTC transactions, you’ll need to select a reputable OTC broker (which is why many brokers make use of escrow services).
  • OTC deals can also take longer than regular cryptocurrency exchanges and peer-to-peer trading since big transactions might take time to process.

What is P2P

P2P (Peer-to-peer) is exactly as it sounds. It is a sort of cryptocurrency over-the-counter (OTC) trading that includes the direct exchange of cryptocurrency assets between individuals without the intervention of a central authority. Traditional cryptocurrency exchanges are organizations that act as middlemen between consumers and generate money by charging fees. On the other hand, on peer-to-peer exchanges, the transactions between counterparties are entirely controlled by pre-programmed software, with no need for human intermediaries. Peer-to-peer trading systems, unlike centralized exchanges, do not handle fiat payments or retain users’ funds in custody.

How P2P exchanges work

Although P2P exchanges and standard cryptocurrency exchanges have certain similarities, P2P exchanges work differently in that they match persons behind the orders rather than matching orders in the order book. That is, whenever a buyer and seller have matching buy and sell orders, the exchange software does not instantly process the trade; instead, it links the buyer and seller, allowing them to complete the transaction without the need for an intermediary. The platform enables you to trade with the appropriate person at the appropriate moment.

Why P2P is trading platform is ideal

Because of speedier transactions, more payment methods, and withdrawal options, P2P trading is the most popular alternative. When the platform is safer and does not allow any central authority to handle your cash, it will be deemed as one of the most ideal trades.

What are the advantages of P2P exchanges

P2P exchanges offer high resistance to transaction censorship, are cheap to use, private and secure; at least when realized properly. All advantages of decentralized cryptocurrency exchanges arise from not having a single company in charge of things. So here are some of the advantages of the P2P exchanges:

  • Transaction censorship resistance — P2P exchanges are practically invulnerable to government interference, because they don’t have any central point of authority which could be coerced.
  • Little fees — P2P exchanges are run by software, so there’s little to no corporate overhead, and, by extension, very small fees for the users, if any.
  • Privacy — Trades can be conducted in a much more private manner as the government or organisation cannot impose those regulations on P2P exchanges.
  • Security — P2P exchanges do not hold cryptocurrencies for their users – instead, they connect traders, allowing them to conduct deals directly

The drawbacks of P2P exchanges

P2P exchanges aren’t better than the regular ones in every regard – longer trade times, less intuitive use cases and lower liquidity are some of their comparative disadvantages which are described as follows:

  • Low trade volume — P2P decentralized exchanges usually have much lower trading volumes than the other exchanges.
  • Longer trade times — Due to the manner at which trades are conducted, traders have to wait for a period of time before a trade is concluded.
  • Low liquidity — P2P exchanges are not at all in demand with, for example, professional traders, who need fast transactions to make timely deals.


I wouldn’t claim one trading strategy is superior to another because each has its own set of advantages and disadvantages.

OTC deals are for bigger, more anonymous trades (particularly if you don’t intend to sway the market). Small deals (as low as $10) and starting your own crypto company are excellent for P2P trades (build business relationships with users you trade with frequently). When it comes to trading, it all depends on what you’re searching for.

There are many popular exchanges that added OTC and P2P features to their platforms, while some exchanges add just one of the features, some other exchanges incorporate the two. For example,  Whalesheaven, a decentralized exchange offers OTC P2P services by combining both features to give an advantage over other platforms.

Whalesheaven: a decentralized OTC P2P trading platform

If you want to trade a high volume directly with a buyer or seller without using a third party or broker, Whalesheaven is the ideal place to go because it simply works as an escrow to confirm trades between buyers and sellers.

As previously said, P2P trading is a sort of crypto OTC trading that involves a direct exchange between a buyer and seller with no third-party intervention. WhalesHeaven, on the other hand, is a trading platform that combines OTC and P2P trading features. This offers it a significant competitive advantage over other exchanges.

WhalesHeaven’s OTC P2P trading service uses a multi-signature system to ensure that both buyers and sellers keep complete custody of their assets while conducting their coin exchange. The platform does not keep track of either party’s crypto assets and simply serves as an escrow to ensure that the sale between buyers and sellers is completed.

WhalesHeaven is a cryptocurrency trading platform that is at the forefront of the decentralized exchange (DEX) movement. It also runs peer-to-peer exchanges to purchase and sell huge amounts of multiple cryptocurrencies, with a configuration similar to that of an auction system.

Bottom line

Since the inception of bitcoin which is just over a decade ago, It’s clear to see that the demand for both OTC and P2P trades are on the rise as there are now so many trades operating on a global scale, trading billions of dollars a year. So many industries continue to develop trading solutions that will make trades and transactions seamless for participants all over the world.