From Followers to Price Setters: The Role of the Crypto Market Is Reversing

Original author: Gracy Chen (X: @GracyBitget)

Last night, a college classmate working on Wall Street suddenly sent me two screenshots: the contract price trends of AI chip company Cerebras (CBRS) on Bitget and Hyperliquid.

He said these two charts appeared in their company's internal meeting. The topic of discussion was quite interesting:

The crypto industry is providing a unique value that Wall Street does not have — offering the opening price of IPO assets earlier than Wall Street.

Take CBRS as an example. On the evening of May 14th (EST), just before the new stock officially began trading, Wall Street was collectively waiting for its opening price. But on platforms like Bitget and Hyperliquid, the market had already started moving ahead of time.

At around 10 AM EST that day (while Nasdaq was still conducting the opening auction for the new stock), both platforms showed similar price trends: the CBRS contract price rapidly surged from approximately $290 to around $380.

Later that day, CBRS officially listed on Nasdaq with an opening price of approximately $350, and hit a high of $386 during the trading session.

In other words, in the case of CBRS, the crypto market completed a remarkably accurate price discovery in advance.

This is quite encouraging.

For a long time, the crypto industry has been waiting for Wall Street's approval, waiting for institutional entry, waiting for traditional finance to give us its endorsement.

But now, the situation is reversing. Wall Street is beginning to seriously look at price signals from the crypto market.

This is not a coincidence, but a manifestation of the structural advantages of the crypto industry. Regarding the price discovery of Pre-IPO contracts, several exchanges have adopted similar mechanisms, such as:

1. Oracle-based internal pricing and smoothing mechanism: During the "blind box" period before the US stock market opens, with zero external price reference, how does the system set prices? Our mechanism is that when there is no external price reference, the system uses an internal oracle to extract large transaction spreads from the order book, adjusting the price once per second. However, the price is calculated based on the Exponential Moving Average (EMA) of prices over the past minute, allowing the current price to slowly converge towards the target price. To draw an analogy: The oracle acts like a radar, capturing large, real-money trades on the order book to calculate a real target price. But to prevent wild price swings from harming retail investors, the system activates a "slow-motion" mode — making tiny adjustments each second to smoothly approach the target price, avoiding malicious liquidations caused by momentary sharp fluctuations.
2. Dynamic price band mechanism balancing risk and flexibility: The system initially sets a price fluctuation range of ±5%. Once the price touches 90% of the boundary, it triggers an automatic re-anchoring. Without changing the market maker's single-time risk model, this expands the maximum price discovery range within a week to approximately ±25%. This is a bit like a retractable dog leash. The system initially defines a safe range for the price (e.g., up or down 5%). If buying pressure is extremely strong and the price is about to hit the ceiling, the system doesn't rigidly lock the trade. Instead, it automatically moves the "ceiling" higher (to, say, up or down 25%). This controls the risk of a single instance of sharp volatility while giving the market ample room to discover the true "opening price."

What truly matters behind all this is: The crypto market is transitioning from being a "follower" to a pioneer within the global asset pricing system.

A few days ago, during a CNBC interview, I mentioned a "10% vision": By 2030, approximately 10% of global financial assets will exist in tokenized form. We are really accelerating towards this vision now.

Writing this, I recalled the time I took my son to visit Wall Street and saw the "Fearless Girl" statue standing in front of the New York Stock Exchange, hands on her hips. She holds her head up high, stubbornly and resolutely staring straight at the vast, ancient, seemingly immovable bastion of traditional finance.

Early Crypto was just like this girl — standing outside the door of the traditional giant, seen as a rebellious outsider and challenger.

In the last cycle, we hoped with all our hearts that Wall Street would turn around and embrace crypto. In the next cycle, Wall Street will discover: they have no choice but to embrace crypto and tokenization.

Because the most cutting-edge market experiments, the fastest liquidity organization, and the most open price discovery are happening right here with us. In this irreversible integration, the massive capital pool of traditional finance is actively connecting to the superior underlying infrastructure of Web3.

Wall Street remains the world's largest container of capital, but Crypto is becoming the "pricing hub" for that container.

Wall Street brings the scale, but Crypto dictates the future of price discovery.

(Photo taken by me in February 2023 @ Wall Street)

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