The over the counter (OTC) arm of Chinese crypto exchange Huobi has added support for Ripple’s cryptocurrency, XRP. This news comes via a press release coming from Huobi.
Huobi’s OTC platform now supports Bitcoin (BTC), Ether (ETH), Tether (USDT), Eos (EOS), Huobi Token (HT), as well as Ripple (XRP), as well as eighteen different fiat currencies that can be used to trade into crypto.
As opposed to a traditional exchange, where traders post amounts and prices at which they are willing to buy (bids) or sell (asks) something – in this case, crypto – that are matched automatically by the exchange in real time if a bid and an ask line up, OTC markets are made up of what amounts to advertisements to buy or sell at a specific price in a specific quantity. In order to complete a trade, users must manually select one of these offers. So, when trades take place on OTC markets, the volume does not hit the exchange. Instead of acting as a middleman, as it does in its capacity as an exchange, Huobi instead holds the funds in escrow on its OTC platform, which is effectively a peer-to-peer marketplace.
Large companies have been known to place OTC trades in order to not move the price on an exchange too much. For example, if you want to buy 10,000 BTC, placing a market order – meaning buying at the lowest ask until your order is filled – on any exchange would move the price of Bitcoin up considerably, giving you a worse price of purchase (in this way, you’d effectively be bidding against yourself).
CEO of Huobi Global, Livio Wang, said in the press release that the Huobi OTC platform is vital to the company since it’s the exchange’s “main platform for users who prefer peer-to-peer trading,” as well as its main onramp.
Huobi Global is currently the eighth largest crypto exchange by daily volume in the world.