Last updated on December 11th, 2017 at 03:06 pm
As Bitcoin’s price soars near the end of 2017 many investors are looking to buy large amounts of Bitcoin. The standard methods used by most people aren’t always suitable for such purchases due to high transaction and deposit fees and limited supply of Bitcoins on the exchanges. This guide will show you the most cost effective ways to buy Bitcoins in large amounts (i.e. exceeding $100,000).
Bitcoin OTC exchanges vs. traditional Bitcoin exchanges
The two main options you have for buying large amounts of Bitcoin are either using OTC exchanges (OTC = over the counter) or the traditional exchanges. OTC exchanges refer to companies or individual willing to sell you Bitcoins directly and not through a regulated and automated trading platform.
OTC exchanges benefits
- High liquidity – OTC companies specialize in supplying high volumes of Bitcoin for large buyers such as institutional investors. This means you will be able to get your order fulfilled in full faster than on a traditional exchange most of the time.
- Fixed price – When you buy large amounts of Bitcoin on a public automated exchange you will probably see the price rise as your order is being executed. This is due to the fact that once you finish buying from the “cheap” sellers, you gradually move to the “expensive” sellers. This means you don’t have a fixed price for your purchase. When you use an OTC exchange you can negotiate a fixed price (e.g. “Bitstamp rate + 1%).
OTC exchanges disadvantages
- Less transparency – While on a traditional exchange the order book is transparent for everyone to see, when buying Bitcoins OTC you don’t know exactly who you’re dealing with or the volume that they have to trade. You are basing your information solely on what you get from the seller.
- Less regulation – Buying OTC means that there is less regulation involved since many of the OTC sellers aren’t listed as money transmitters hence the risk with these transactions increases.
Known Bitcoin OTC exchanges
Having listed the various pros and cons of using OTC exchanges let’s go over some of the more known OTC exchanges in the Bitcoin economy. Most of these services require for you to apply and are not open for the general public.
ItBit for institutions
ItBit is a well known Bitcoin exchange funded in 2013. It is a regulated exchange in the US that supplies Bitcoin exchange services for small and institutional investors. ItBit for institutions is the full-service financial services company for institutions trading bitcoin. The Institutional Client Group (ICG) provides institutions and active traders with personalized service and support. Itbit states that its OTC market has very competitive pricing which makes it very attractive considering it’s also a regulated exchange.
Genesis is an institutional trading firm offering two-sided liquidity for digital currency, including bitcoin and ether. Since September 2013, Genesis has traded over 1,500,000 Bitcoin (BTC), worth over $600 million United States Dollars, and has completed over 6,000 trades.
The company has a minimum trade size of 25 Bitcoins (currently worth around $22,000). However their average trade is around 375 Bitcoins (currently worth around $300,000).
Unlike some other OTC exchanges, Genesis is regulated by FINRA and the SEC. They have also submitted their request for a Bitlicense in the state of New York. They have been covered by the press many times although not much has been heard about them during 2016.
The company offers competitive pricing for institutional size Bitcoin transactions. They supply liquidity to some of the major traditional Bitcoin exchanges as well. There’s not much info on the company’s website however Coindesk has researched it in the past and they have also partnered with Tradeblock.
Richfund – The largest Bitcoin hedge fund in the world
Richfund was founded back in early 2013 by a team of bitcoin proponents. It deals with mining operations, market-making, automated arbitrage, and OTC trading. Richfund provides 1000-5000BTC’s large OTC services in China, Korea, Cambodia, Hongkong and Taiwan.
Athena Investor Services
Launched in late 2017 Athena Investor Services (or AIS) is a high-touch OTC trading platform that allows people in the United States to buy and sell between $10,000 and $500,000 in BTC, ETH, BCH, DASH, EOS, ETC, GNO, ICN, LTC, MLN, REP, USDT, XDG, XLM, XMR, XRP, and ZEC. Payment is made via wire transfer, and the cryptocurrency is typically sent within a couple of hours, but can take up to 12 hours depending on how long the user takes to complete the on-boarding process.
Traditional Bitcoin exchanges suited for large transactions
If you want to use traditional automated and regulated Bitcoin exchanges to buy large amounts of Bitcoin there are several exchanges that are suited for that purpose.
Coinbase (wallet and exchange)
Coinbase is one of the leading Bitcoin companies today. There are two options for you to buy large amounts of Bitcoins through Coinbase.
- Coinbase wallet – If you’re a fully verified member you can buy Bitcoins from Coinbase’s brokerage service directly up to $50,000 per day (in some states in the US you can raise the limit to $100,000 daily). Even though the price is very close to the market price Coinbase will take 1% of these transactions which is relatively expensive.
- GDAX (Coinbase exchange) – The exchange has a trading volume of around 4,000 Bitcoins per day.When you place an order at the market price that gets filled immediately, you are considered a taker and will pay a fee between 0.10% and 0.25%.When you place an order which is not immediately matched by an existing order, that order is placed on the order book. If another customer places an order that matches yours, you are considered the maker and your fee will be 0%. However GDAX has lower daily buying limits than the Coinbase wallet brokerage service and it will allow you to buy up to $10,000 worth of Bitcoins a day.
The oldest Bitcoin exchange around, Bitstamp currently has an average trading volume of 5,000 Bitcoins daily. Deposit fees are as low as 0.05% and depending on your trading volume you will pay a transaction fee of between 0.25%-0.1%. If you are using SEPA to transfer your money you won’t be charged any deposit fees.
(On a personal note, I use this method to buy large amounts of coins)
Founded in 2011, San Francisco-based Kraken is the largest Bitcoin exchange in Euro volume and liquidity and also trading Canadian dollars, US dollars, British pounds and Japanese yen. Kraken has similar trading volume to Bitstamp with around 5,000 Bitcoins per day traded on average.
Kraken fees are calculated on a maker-taker module similar to GDAX. The fees vary from 0%-0.26% depending if you’re the maker or the taker.
With all of the hype around it, Bitcoin is still in its infancy and the options to buy large amounts of it are limited. However, the services listed above will give you a more than fair solution for this situation. If possible and liquidity permits I suggest going with the regulated exchanges (i.e. Bitstamp, Kraken, GDAX) over the OTC exchanges.