While crypto markets were wracked, OTC trading desks that deal in digital currencies over the counter (OTC), saw a surge of orders during the week. Cumberland’s cryptocurrency OTC trading desk, a subsidiary DRW explained that the firm had 30% more orders on June 13 than its previous high of May 13.
Cumberland Says ‘On Big Swings, More Volume Tends to Come to OTC Desks’
High-net-worth cryptocurrency traders can trade on OTC trading desks without having to affect spot markets. OTC trading tables also offer liquidity that larger exchanges can’t provide. Numerous companies provide OTC trading services for crypto traders such as Kraken OTC and Falconx.
Amid the recent crypto market carnage, the DRW company Cumberland tweeted about the firm’s OTC flow during the past week and let people in on some of the moves that were made. “The most frequent question we’re asked on weeks like this is ‘what does the flow look like?’” Cumberland tweetedOn June 14, “OTC flow gives some insights into how the market is handling these major moves,” the OTC trading desk added. Cumberland, which was created in 2014, has been one of the best OTC desks globally over the years.
When Cumberland first started, news reports noted that the company was able to acquire massive amounts of bitcoin (BTC) via a few U.S. Marshalls’ operated auctions. Cumberland offers more than 30 different digital assets against 500 pairs, and the company claims to be “one of the largest liquidity providers in the cryptocurrency space.” Speaking about the recent crypto market rout, Cumberland disclosed that lots of crypto volume came directly to OTC desks.
Cumberland claimed:
On big swings, more volume tends to come to OTC desks, and yesterday was no exception; it was the most volume we’ve seen so far this year. This volume was actually 30% higher than the previous YTD record, which occurred on May 13, 2013. Traders tend to use OTC during fast markets because it’s much easier to move size. Volumes were heavily BTC-centric with 75% or more of bitcoin’s total volume. ETH accounted for the bulk of the remaining balance. Traders are more likely to choose the liquidest products to reduce their exit risk.
The cryptocurrency market bloodbath showed that a substantial amount of leverage had been wiped off in the past two weeks. Cumberland suggests that liquidations were responsible for a large portion of the June 13 flow. Numerous crypto-lending firms were recently accused of liquidating large positions, such as Celsius. Three Arrows Capital, a large crypto hedge fund (3AC), is also accused of dealing with over-leveraged assets and financial hardships.
“The flow ratio suggests a lot of the flow was liquidations, with a 2:1 ratio of sellers to buyers,” Cumberland’s Twitter thread concluded. “As always, Cumberland is proud to act as the backstop of liquidity during the most severe market moves.”
What do you think about Cumberland’s summary of OTC flow from the recent crypto market bloodbath? Comment below and let us know how you feel about the subject.
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