A Bitcoin RFQ (request for quote) is the standard way to price an OTC trade. You tell a liquidity provider the size and direction you want, it returns a firm all-in price that is valid for a short time, and if you accept within that window the trade is done at that price. Run well, a competitive RFQ gives a company a known cost and a clear audit trail.
The basic mechanics of a Bitcoin RFQ
An RFQ has four parts: the request, the quote, the decision and the confirmation.
- The request. An authorised trader states the instrument, side, size and settlement terms. For example: "Buy 25 BTC against USD, settlement DvP to our custodian, same day."
- The quote. The provider returns a firm price. The quote is usually valid for a short period, often a few seconds and sometimes longer for larger or less urgent trades.
- The decision. You accept or let the quote expire. Accepting inside the validity window creates a binding trade. Letting it lapse costs nothing.
- The confirmation. The provider sends a written trade confirmation stating price, size, total consideration, trade time and settlement instructions.
RFQs can be run by phone, through secure chat or through an electronic platform. Electronic channels create a timestamped record automatically, which helps with audit and best-execution review.
One-way vs two-way quotes
Some companies ask for a two-way quote: a bid and an offer, without saying whether they are buying or selling. This stops the provider from shading the price towards the side it suspects you want.
Others ask for a one-way quote on the side they need. This is simpler and often gives a slightly sharper price, because the provider knows exactly what risk it is taking on.
Neither is universally better. Two-way quotes add discretion; one-way quotes add clarity. In a competitive process with several providers, the competition itself does much of the work of keeping prices fair.
What drives the quoted price
An RFQ quote is the provider's view of the market price, plus a spread to cover its cost and risk. The spread is not arbitrary. It reflects:
| Driver | Effect on the quote |
|---|---|
| Order size relative to available liquidity | Larger relative size generally means a wider spread |
| Market volatility | Higher volatility means more risk while the provider hedges |
| Time of day and day of week | Thinner liquidity periods tend to cost more |
| Hedging route | How easily the provider can offset the position |
| Settlement terms | Pre-funding, DvP or deferred settlement change the provider's exposure |
| Quote validity | A longer window means more risk for the provider, so a wider price |
Settlement terms deserve particular attention. If you ask the provider to deliver Bitcoin before receiving your cash, it is extending you credit and will price that in. If you pre-fund, the provider's risk falls but yours rises. Delivery-versus-payment through a custodian or settlement agent balances the two.
Firm vs indicative quotes
Always be clear which kind of quote you are receiving.
- A firm quote is executable. If you accept within the window, the provider must trade at that price.
- An indicative quote is a guide only. The final price may differ when you ask to trade.
Indicative quotes are useful for planning and budgeting. They should never be the basis for a board approval of a specific trade price, because they are not commitments.
How to run a fair competitive RFQ
For larger orders, ask several providers at once. A disciplined process looks like this:
- Onboard providers in advance. RFQ competition only works with counterparties you can actually settle with.
- Send identical requests. Same size, side, settlement terms and quote validity to every provider, at the same time.
- Keep the panel small. Asking too many providers for the same large order can leak information as they each prepare to hedge. A short panel of trusted providers is usually enough.
- Decide on objective criteria. Usually best price, adjusted for settlement terms and counterparty limits.
- Record everything. Every quote received, its timestamp, who accepted and why.
CFO tip: write your RFQ rules into the treasury policy before the first trade: minimum number of quotes for orders above a set size, who may accept, and what to do if only one provider responds. This turns each trade into a routine, documented event rather than a judgement call.
When RFQ is not the right tool
RFQ works best when you want certainty on a defined size now. For very large orders, a single quote may carry a wide spread because the provider must take the full risk at once.
Alternatives include:
- Splitting the order into several RFQs across a day or week.
- A worked order against a benchmark, such as TWAP or VWAP execution, where the provider executes over time and you accept the average price.
- A negotiated block trade, where size, timing and price are agreed in a more bespoke way.
Each trades certainty of price against expected cost. Our guide to slippage and market impact explains that trade-off.
Settlement after the quote is accepted
Accepting a quote fixes the price. It does not complete the trade. The trade is complete only when both legs have settled.
Agree in advance:
- The settlement model: pre-funding, DvP or a defined settlement window.
- The cash account and whitelisted Bitcoin address to be used.
- The cut-off time for the cash leg, bearing in mind that bank wires are constrained by business hours while Bitcoin moves at any hour.
- What happens if either leg is late or fails.
Our article on settlement and counterparty risk covers these points in more depth. Take your own legal and accounting advice on how trades are confirmed and recorded.
How The Bitcoin World helps
We source Bitcoin for larger corporate purchases from several licensed institutions, so your company can show its board a fair price, with every step documented. We agree settlement terms in advance and coordinate delivery to your custodian. Execution, custody and settlement are performed by licensed third-party institutions. See our OTC liquidity service.