Over-the-counter (OTC) desks played a crucial role in stabilizing trade during the recent crypto market accident by acting as shock absorbers containing volatility and limited wider systemic risks, according to a note from Finery Markets, a leading crypto ECN and trading SaaS SaaS provider ranked among the best 30 digital active company global.
On Friday, Bitcoin The leading cryptocurrency with market value threw itself from about $ 122,000 to $ 103,000, with most of the losses that occurred in the late hours. The wider market withered, marked massive losses in alternative cryptocurrencies and volatility in otherwise stable cryptocurrencies such as ethena’s synthetic dollar usde, wrapped Fyrther (Wbeth) and Binance Staked Sol (BNSOL).
The USDe crashed shortly as low as 65 cents on binance, largely due to the exchange’s own inefficiencies, while steading stable on other, more floating roads such as curve, fluid and city bites.
According to Finery Markets, the localized crisis could have spread if it had not been for OTC writing tables that acted as shock absorbers.
“The crisis emphasized the value of secondary trade carried out through OTC private rooms. This infrastructure acts as a firewall against systemic contagiousness due to the fundamental difference in order book structure,” the company said in a report shared with Coindesk.
The company explained that OTC writing tables, in contrast to centralized roads such as Binance, which depend on central, visible liquidity, offers a unique private environment with liquidity off the screen tailored to each participant.
“[This] Dark liquidity reduces the spread of systemic risk significantly, ”the company said, adding that private rooms can help avoid banking-like dynamics caused by visible panic in public order books.
OTC writing tables and centralized exchanges are different in how they supply liquidity and perform trades. On OTC writing tables, trade is done privately between buyers and sellers or through private liquidity pools. Institutions and large dealers typically shop over OTC writing tables to avoid influencing the ongoing market rate of the asset.
Centralized exchanges work with transparent order books where all participants can see available purchases and sell orders, creating visible liquidity, but also exposes the market to fast, panic -driven volatility.
Volume wave on veneer
The institutional flight to stability during the big liquidation event from 10-12. October is evident in the rise of trading volume within the Finery Markets’ private trading space.
Week-to-week, BTC/USDT and ETH/USDT pair in these private rooms increased by 107%, surpassing a significant 48% growth seen on centralized platforms. At the same time, BID-SASK SPREADS, a key indicator of liquidity, struggled sharply at Finery’s OTC venues, reflecting improved market depth and stability.
The diagram shows that bite-ash spreads for 0.01 BTC on Finery were significantly narrower than those on larger centralized exchanges such as Coinbase, Bitstamp, Kraken and Binance.
In other words, it was easier to perform large trades with finer than on other ways.
