Traders using the OTC markets to buy and sell bitcoin are matched directly with a counterparty to execute the trade, rather than broadcasting their trade to the larger markets. These trades are usually conducted by a broker, who performs the function of matching buyers with sellers or even executes trades on its own behalf.

OTC trades are often preferred by larger traders or institutions who want to open or exit a position without revealing their intentions to the market or affecting the market price. For example, many large miners and payment processors use OTC trades to sell the bitcoin they acquire to interested investors without flooding the exchanges. Because of this, OTC trading has always played a large role in the Bitcoin ecosystem, but the extent of that role has been largely unknown until now.

ItBit releases third quarter OTC report

ItBit is currently the only bitcoin exchange with a formal OTC trading desk, although there are other financial companies such as Genesis Trading that provide OTC trading services in bitcoin. These brokers and trading desks typically deal in trades of 100 BTC or more.

ItBit, (the first bitcoin exchange to receive a banking charter), recently released its third quarter OTC report with details about its trading volumes:

Total Bitcoin Volume Traded: 61,853 XBT
Total USD Amount Traded: $15 Million
Average Daily Trading Volume: 1,100 XBT
Average Month-over-Month Trading Volume Growth: 71%