What are the risks of investing in OTC cryptocurrencies?

3 answers

• Dec 28, 2021 · 3 years ago
  Investing in OTC cryptocurrencies carries several risks that investors should be aware of. One of the main risks is the lack of regulation and oversight in the OTC market. Unlike traditional exchanges, OTC transactions are not subject to the same level of scrutiny and regulation. This makes it easier for scammers and fraudsters to operate in the OTC market, increasing the risk of falling victim to a scam. Additionally, OTC trades often involve large sums of money and can be more susceptible to price manipulation. It's important to thoroughly research and vet any OTC cryptocurrency before investing to mitigate these risks.
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• Dec 28, 2021 · 3 years ago
  When it comes to investing in OTC cryptocurrencies, one of the biggest risks is the lack of transparency. Unlike cryptocurrencies traded on traditional exchanges, OTC transactions are typically conducted privately between two parties. This means that there is limited information available about the transaction and the parties involved. This lack of transparency can make it difficult to assess the true value and legitimacy of an OTC cryptocurrency, increasing the risk of investing in a fraudulent or overvalued asset.
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• Dec 28, 2021 · 3 years ago
  At BYDFi, we understand the risks associated with investing in OTC cryptocurrencies. While OTC trading can offer certain advantages, such as increased privacy and flexibility, it's important to approach it with caution. One of the key risks is the potential for price manipulation. OTC markets are less liquid and more susceptible to price manipulation compared to traditional exchanges. Investors should also be aware of the counterparty risk involved in OTC transactions. Unlike trading on a centralized exchange, OTC trades involve direct transactions between individuals or institutions, which can increase the risk of default or fraud. It's crucial to conduct thorough due diligence and only engage in OTC trading with reputable and trusted counterparties.
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