binance CEO

October was the worst month of the year for cryptocurrency volume. Now deep into a bear market, the amount of crypto changing hands on a daily basis has slumped.

However, CEO of the world’s largest cryptocurrency exchange, Binance, says the real volume is at least twice as big as reported.

Speaking to CNBC’s Ran Neuner, Changpeng Zhao pointed to the enormous over-the-counter (OTC) market for hidden volume:

“What I’ve heard is the OTC market is at least as large as the live recorded volumes. So that is at least 50 percent of volume that is not being reported on CoinMarketCap.”

Crypto volume, explained: “Volume” is the amount of cryptocurrency changing hands on a daily basis. It is typically measured on CoinMarketCap by combining data from cryptocurrency exchanges like Binance, Coinbase, Bitfinex, etc. 

OTC Markets: Where the Whales Trade

Traditionally, over the counter markets are those in which trades are made in secret, and not recorded on an order book.

In the case of bitcoin, investors are buying and selling millions of dollars of cryptocurrency directly between one another, avoiding an exchange like Binance completely.

They may also operate through crypto brokers (such as BitStocks or Circle) which require high trading minimums. It allows “whale” investors to move their cryptocurrency without shaking the markets.

bitcoin whales

As Large as the Exchange Market?

As mentioned above, Changpeng Zhao believes this crypto OTC market is at least as large as the recorded volumes across the major exchanges. 

This chimes with a report released earlier this year by research firm TABB. They concluded that the crypto OTC market is at least two to three times larger than reported.

CoinMarketCap is currently reporting a 24-hour volume of $12.5 billion. If Changpeng Zhao’s analysis is correct, the real trading volume across the crypto market is closer to $25 billion.

Why Do “Whales” Trade OTC?

The first reason is liquidity. Crypto whales and institutional investors often trade multi-million figures in bitcoin and altcoins on a daily basis. 

Even the largest exchanges don’t often have millions of dollars in liquidity to facilitate such trades. Only by making private trades can they access the necessary buyers.

Furthermore, if a whale suddenly offloaded tens of million in bitcoin on a crypto exchange, it would very likely crash the market.

“We Are Still a Very Healthy Business”

Elsewhere in the interview, Changpeng Zhao reaffirmed that Binance was a healthy business, despite a 90% drop in volume since January’s boom.

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