OTC Desks Acted as Shock Absorbers During Binance-Driven Crypto Liquidation, Finery Markets Says

Over-the-counter (OTC) trading desks played a critical role in stabilizing the crypto market during last week’s sharp downturn, acting as shock absorbers that contained volatility and prevented systemic contagion, according to Finery Markets, a top-ranked crypto ECN and trading SaaS provider.

During Friday’s market collapse, Bitcoin (BTC) fell from roughly $122,000 to $103,000, with most losses occurring late in the session. The broader crypto market also suffered, with significant declines across altcoins and heightened volatility in previously stable assets such as Ethena’s USDe, Wrapped Beacon Ether (wBETH), and Binance Staked SOL (BNSOL).

USDe briefly dropped to $0.65 on Binance, largely due to platform-specific inefficiencies, while it remained stable on other liquid venues like Curve, Fluid, and Bybit.

According to Finery Markets, the localized turbulence on Binance could have spread across the market had it not been for OTC desks providing a stabilizing effect.

“The crisis highlighted the value of secondary trading in OTC private rooms. This infrastructure acts as a firewall against systemic contagion due to the fundamental differences in order book structure,” Finery Markets wrote in a report shared with CoinDesk.

Unlike centralized exchanges, which operate with visible order books that expose liquidity to all participants, OTC desks provide private trading environments. These “dark liquidity” pools allow large traders and institutions to execute transactions without triggering panic-driven price swings, effectively reducing systemic risk.

“[Private rooms] help prevent bank-run-like dynamics that can occur when public order books reflect visible panic,” the report added.

During the October 10–12 liquidation event, trading volume on Finery Markets’ OTC rooms surged as institutions sought stability. Week-over-week, volume in BTC/USDT and ETH/USDT pairs increased 107%, more than double the 48% growth on centralized exchanges. Bid-ask spreads—key indicators of liquidity—narrowed sharply in these private venues, highlighting improved market depth and stability.

In comparison, bid-ask spreads for 0.01 BTC were considerably tighter on Finery than on major exchanges such as Coinbase, Bitstamp, Kraken, and Binance, making large trades more efficient and less disruptive to the broader market.

Finery Markets’ analysis underscores the crucial role of OTC infrastructure in buffering markets from sudden shocks, demonstrating how private liquidity can maintain stability during periods of extreme stress.