So we can now understand, in a very basic way, how bitcoin’s price is reached, through the interaction of buyers and sellers at exchanges. Exchanges aren’t however, the only way to buy bitcoin.
Where an individual or organisation wants to buy or sell a large amount of bitcoin, they may not want to go through an exchange because there are unlikely to be enough buyers or sellers at the price they want to execute at. And given exchanges expose trading intent (as we’ll see below) the simple act of placing an order on an exchange can move price.
This type of transaction is described as OTC – Over the Counter – happening outside of the regular exchange market mechanism. Trades are negotiated through a broker, and involve very large sums. We’ll explain more about OTC as we unpack this section.
The interaction described between buyers and sellers at exchanges is broadcast real-time, save for actual customer detail and the understanding the information is a crucial part of the art of trading.
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