Institutional crypto trading is shifting away from centralized exchanges toward off-exchange execution, with over-the-counter (OTC) markets and decentralized platforms capturing a growing share of activity, according to a report.
Data shows a clear divergence in market structure.
OTC spot trading volume rose 43% year-over-year, while decentralized exchanges (DEXs) grew 39% over the same period, a report by Finery Markets and Caladan stated on Tuesday.
In contrast, volumes across the top 20 centralized exchanges declined 45%, indicating a sustained move by institutional participants toward alternative execution venues.
Off-Exchange Execution Reshapes Liquidity And Price Discovery
The shift reflects how large players are choosing to trade. OTC markets allow institutions to execute large orders with minimal market impact, greater discretion, and improved capital efficiency. The report notes that this migration mirrors the evolution of foreign exchange markets, where most liquidity operates off-exchange rather than on public venues.
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As a result, a growing share of crypto liquidity is now being transacted outside visible order books. Monthly OTC growth also showed signs of normalization, slowing from 63% in January to 25% in March, suggesting a maturing but still expanding segment following the volatility of late 2025.
Stablecoins And Ethereum Drive Institutional Flows
Stablecoins have become the dominant settlement layer in this evolving structure. Their share of total trades rose to 82% in Q1 2026, up from 76% a year earlier, while crypto-to-stablecoin flows increased 82% year-over-year.
At the asset level, institutional flows are becoming more concentrated in major tokens, with Bitcoin and Ethereum accounting for 74% of total OTC volume. However, the composition is changing. Ethereum’s share rose sharply from 20% to 41%, while Bitcoin’s declined from 42% to 33%, indicating a reweighting within institutional portfolios.
Market Structure Shift Extends Beyond Trading Venues
The report frames these developments as structural rather than cyclical. The combination of rising OTC volumes, expanding DEX activity, and declining centralized exchange participation points to a reconfiguration of crypto market infrastructure.
This transition is occurring alongside macro volatility and regulatory developments, including ongoing progress on U.S. market structure legislation.
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