While the crypto markets got hammered last week, digital currency-centric over-the-counter (OTC) trading desks were swamped with orders.DRW’s subsidiary, the crypto currency OTC trading desk Cumberland, explained on June 13 that volume was 30% higher than the previous yearly high on May 13.
Cumberland stated that “with big swings, more volume tends to come to the OTC desk”
Over-the-counter (OTC) trading desks allow wealthy crypto traders to trade coins without affecting the spot market as they do on traditional exchanges. OTC trading desks also provide major buyers with liquidity that smaller exchanges cannot offer: Kraken OTC, Falconx, Cumberland, Athena Investment Services, Crypto Desk, B2C2, Bankhaus Scheich, Bitpanda Plus, Coin Cola, and many others offer OTC services to crypto traders.
In the recent crypto market carnage, DRW company Cumberland tweeted about the company’s OTC flows over the past week, letting people know about some of its moves.” The question we are asked most often in weeks like this is what the flows look like.” Cumberland tweeted on June 14.” OTC flows give us some insight into how the market is dealing with these big moves.” added the OTC Trading Desk. Cumberland was founded in 2014 and has become one of the top OTC desks in the world over the past few years.
When Cumberland was first founded, news reports noted that the company was able to acquire large amounts of bitcoin (BTC) through several auctions run by US Marshalls. Cumberland offers more than 30 different digital assets for 500 pairs and claims that the company is “one of the largest liquidity providers in the cryptocurrency space.” Speaking about the recent routing of the crypto market, Cumberland revealed that a lot of crypto volume came directly to the OTC desk.
Big swings tend to bring a lot of volume to the OTC desk, and yesterday was no exception, with the highest volume so far this year. In fact, volume was 30% higher than the previous high of the year (May 13). Traders tend to use OTC when the market is fast because it is easier to move size. Volume was very BTC-centric, with about 75% of the total volume flowing in bitcoin. ETHmade up most of the rest. When looking to exit risk, traders tend to trade the most liquid products.
The carnage in the crypto market showed that a significant amount of leverage had been wiped out over the past two weeks. Cumberland suggested that a significant portion of the June 13 flow was liquidation. Many crypto lending firms have been accused of liquidating on very large positions in recent times, such as Celsius; large crypto hedge funds such as Three Arrows Capital (3AC) have also been accused of dealing with financial difficulties and liquidation from over-leveraged positions blamed.
“The ratio of flows suggests that many of the flows were liquidations, with a seller to buyer ratio of 2:1.” Cumberland’s Twitter thread concludes thusly.” As always, Cumberland is proud to serve as a liquidity backstop during the most challenging market moves.”
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