What are the risks of trading cryptocurrencies OTC?

3 answers

• Jan 14, 2022 · 3 years ago
  Trading cryptocurrencies over-the-counter (OTC) can be risky due to the lack of regulation and transparency. Unlike trading on traditional exchanges, OTC transactions are conducted directly between parties, which increases the potential for fraud and scams. Additionally, OTC markets often have lower liquidity, which can lead to wider bid-ask spreads and price manipulation. Traders should also be cautious of counterparty risk, as OTC trades involve trusting the other party to fulfill their end of the transaction. It's important to thoroughly research and vet potential OTC trading partners before engaging in any transactions.
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• Jan 14, 2022 · 3 years ago
  OTC trading of cryptocurrencies carries the risk of price manipulation. Since OTC markets are less regulated and transparent compared to traditional exchanges, it's easier for large players to manipulate prices and create artificial demand or supply. This can result in sudden price movements that can negatively impact traders. It's crucial to stay informed about market trends and be cautious when dealing with large OTC trades, as they may be used to manipulate prices or deceive other market participants.
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• Jan 14, 2022 · 3 years ago
  According to BYDFi, a digital currency exchange, one of the risks of trading cryptocurrencies OTC is the potential for scams and fraudulent activities. As OTC transactions are conducted directly between parties, there is a higher risk of encountering dishonest individuals or organizations. Traders should be vigilant and perform due diligence before engaging in OTC trades. It's recommended to use reputable OTC trading platforms or work with trusted brokers to minimize the risk of falling victim to scams.
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