From Mining Pools to Wall Street: The Transfer of Bitcoin Pricing Power

The pricing power of Bitcoin is shifting from miners and offshore exchanges to Wall Street institutions, with CME and ETFs becoming the core forces in the market.

Written by: Cathy

In 1792, 24 brokers stood under a sycamore tree in downtown Manhattan and signed an agreement.

There were no lawyers, no regulatory bodies, and not even a formal table. But the agreement determined not the trading rules, but who was qualified to sit at the table.

More than two hundred years later, the table has changed, but the logic remains the same.

This time, however, it is Bitcoin that has been rearranged. BlackRock's IBIT, an ETF established just over a year ago, has already absorbed nearly 750,000 Bitcoins, with a net asset value exceeding $47 billion.

These coins are locked in Coinbase's cold storage vault, physically isolated from the internet, under the watch of the New York State Department of Financial Services.

Before 2021, the pricing power of Bitcoin was held by two groups. On one side were the mining giants: large mining pools controlled the computing power, hoarding and selling coins to influence the market, and a single fork war could turn the market upside down. On the other side were offshore exchanges: BitMEX invented the hundredfold leveraged perpetual contracts, and Binance took over to grow, where a single spike could wipe out hundreds of millions in long positions.

It was a closed self-circulating market, unrelated to the Federal Reserve.

In January 2024, the SEC approved a spot Bitcoin ETF. The pricing power began a steep transfer.

01 Afternoon Tea Time Decides Bitcoin Price

In the past, Bitcoin price discovery was scattered across dozens of offshore exchanges, with no unified benchmark, and spikes were commonplace.

Now, everything aligns with CME.

Multiple studies based on the Hasbrouck information share model show that CME Bitcoin futures, rather than Binance or any offshore exchange, are becoming the dominant force in Bitcoin price discovery.

The mechanism is not complex. At the moment when non-farm payroll data or CPI is released, macro hedge funds and proprietary traders with compliant channels at CME are the first to adjust their positions using algorithms. Offshore spot and perpetual contracts then passively follow.

Even within CME, there is a hierarchy; the price discovery dominance of standard contracts is significantly stronger than that of micro contracts. Big money calls the shots.

The intraday trading model illustrates the issue further. Bitcoin's trading volume and volatility exhibit a clear inverted U-shaped curve during overlapping trading hours in London and New York. In simple terms, the core market is determined by Wall Street traders during working hours.

The pricing benchmark has also been unified. Most mainstream spot ETFs and CME futures are bound to the same regulated algorithmic pricing system: CME CF Bitcoin Reference Rate (BRRNY). A few issuers like Fidelity use their own benchmarks, but the direction is consistent.

In the past, offshore exchanges relied on spikes and wash trading to manipulate prices, but facing the BRRNY benchmark price constructed from massive real USD orders, that no longer works. In May 2026, CME will launch 24/7 trading, closing the window for extreme market conditions even on weekends.

02 The Spot Black Hole and Shadow Central Banks

CME has taken over short-term price discovery from offshore exchanges. What BlackRock and others have taken over from miners is the long-term price floor.

In the past, institutions wanting to buy Bitcoin had to manage private keys themselves, pass security compliance checks, and deal with complex tax operations. The barriers were high enough to block most traditional funds.

Now, they only need to punch in a stock code on Nasdaq.

The funds entering IBIT through pension funds, family offices, and wealth advisors are mostly of the buy-and-hold type. They treat Bitcoin as digital gold, not engaging in swing trading or looking at K-lines. A continuous absorption of circulating supply, with very little outflow, has thus formed a spot black hole.

But the real controllers of the mid-term and short-term rhythm are another group of people.

Spot ETFs provide institutions with a compliant underlying asset, making large-scale basis trading possible. Buying ETFs to go long on the spot while shorting equivalent futures at CME locks in the spread profit.

This trade has nothing to do with Bitcoin faith. Hedge funds only look at one thing: the spread between the Federal Reserve's risk-free rate and the crypto market premium.

During the peak of the bull market, CME futures annualized premiums once exceeded 20%. After the influx of billions of dollars in arbitrage capital, by the end of 2025, it had been compressed to around 5%, nearly on par with the risk-free rate.

The CFTC's weekly COT report makes it clear: leveraged funds have accumulated record short positions at CME.

When the market overheats, they rush to sell futures, absorbing the frenzied bullish forces and creating upward resistance. When the basis narrows to unprofitable levels, they then massively close positions, creating significant selling pressure in the spot market.

In the past, this role belonged to miners and exchange market makers. Now it belongs to Wall Street hedge funds. They don't care what Satoshi Nakamoto wrote in the white paper; they allocate funds based solely on the spread. But their entry and exit determine the ceiling and floor of the market. In fact, they have become the shadow central banks of the crypto market.

03 Bulldozers Also Have Fuel Costs

Hedge funds act as shock absorbers. MicroStrategy was once a one-way bulldozer. Note, it was once.

Michael Saylor led this former software company to launch the "42/42 Plan": raising $84 billion, all to buy Bitcoin in the open market. As of August 2026, they had accumulated about 840,000 Bitcoins, accounting for 4% of the total supply.

The flywheel turns like this. MicroStrategy issues zero-interest or very low-interest convertible notes, and what investors buy is essentially a Bitcoin call option with principal protection.

MSTR stock is the most convenient leveraged Bitcoin exposure available to compliant institutions in the U.S. market. Those who can't buy Bitcoin buy it instead. The stock price maintains a high premium relative to the net asset value of the underlying asset over the long term. After being included in the Nasdaq 100 index at the end of 2024, passive fund buying added another layer of fuel.

With the premium in place, the issuance continues. New shares are exchanged for cash, cash is used to buy Bitcoin, the number of Bitcoins corresponding to each share increases, the stock price continues to rise, and then more shares are issued and bought. This cycle forcibly converts the liquidity of the U.S. stock bond market into purchasing power for Bitcoin.

But the flywheel has fuel costs. To raise funds, MicroStrategy has issued multiple rounds of preferred stock, and the annual dividend obligation has exceeded $1.7 billion. In 2026, Strategy began selling Bitcoin to pay the bills. Just in the first week of August, they sold 1,690 Bitcoins, cashing out about $109 million.

Once a super whale that only bought and never sold, now they are buying and selling. The flywheel is still turning, but maintenance costs are rising.

The underlying pipeline supporting all this is Coinbase Prime. At least 8 of the first 11 spot Bitcoin ETF issuers chose it for custody, managing over 80% of U.S. Bitcoin ETF assets. It is not just a service provider; it is the central control room of the entire Wall Street crypto system.

Miners were once the largest natural shorts in the market. But with billions of dollars in net inflows into ETFs daily, they easily digest the hundreds of new coins produced by miners each day. Large mining companies have simply transformed to sell computing power to Microsoft and CoreWeave, signing contracts worth billions of dollars for AI infrastructure.

The old forces have retreated without causing much of a stir. The pricing power of Bitcoin has shifted from miners and offshore exchanges to CME, BlackRock, hedge funds, and Coinbase.

The rules set under that sycamore tree in 1792 are once again in effect.