How do crypto markets work, and who decides the price?

Where does crypto actually trade?

Shares of a listed company trade on linked exchanges under one market-wide rulebook. Crypto-assets do not. A token such as bitcoin can be bought on many separate venues in different countries, each with its own customers, rules and prices, and trading runs around the clock, every day of the year³.

The venues fall into three broad groups. The first is the centralised trading platform: a company that takes customer deposits, keeps an order book of buy and sell orders and matches them on its own servers. The second is the decentralised exchange (DEX), where software on a blockchain does the matching. The third sits inside traditional finance: in January 2024 the US Securities and Exchange Commission approved the listing of several exchange-traded products that hold bitcoin directly⁷, so investors can now get exposure through an ordinary brokerage account.

How does a centralised exchange differ from a decentralised one?

On a centralised platform, a trade happens when a new order crosses the gap between the highest bid and the lowest ask, and orders are filled best price first, earliest first¹⁰.

A decentralised exchange works differently. Economists at the Bank for International Settlements describe how DEXs match traders through automated market maker protocols: traders deposit pairs of tokens into a shared liquidity pool, and anyone can swap against that pool at a price set by the quantities of each token it holds². There is no order book and no company taking deposits. The same BIS authors caution that full decentralisation is an illusion, because every DeFi platform still has a governance group that sets its priorities². Our DeFi explainer goes deeper into how these protocols are built.

Who sets the price of bitcoin?

Nobody does, in the sense of an official fixing. Every venue produces its own price from its own trades. Traders who buy where a coin is cheap and sell where it is dear, a practice called arbitrage, pull those prices towards each other. But the gaps do not always close. A study in the Journal of Financial Economics found large, recurring arbitrage opportunities between crypto exchanges, with price gaps much wider between countries than within them, which the authors link to capital controls that slow money moving across borders⁴.

So when a website shows "the" bitcoin price, it is showing one of two things: the last trade on a particular venue, or an index that blends trades from several. For example, a 2026 order by the Commodity Futures Trading Commission describes the CF Benchmarks Bitcoin Real Time Index as a US dollar price of bitcoin derived from observable transactions on major trading platforms⁸.

Why are stablecoins everywhere in crypto trading?

Crypto venues never shut, but moving ordinary dollars depends on traditional payment systems. Traders therefore use a dollar-like asset that also lives on a blockchain. That is the job of stablecoins, tokens designed to hold a steady value against a currency such as the US dollar. A Federal Reserve Board paper notes that investors often prefer to trade with stablecoins rather than ordinary bank balances because they allow near-instant trading 24 hours a day, 365 days a year, without relying on traditional payment systems³. The BIS authors add that stablecoins carry funds between platforms and users across decentralised finance².

Who regulates crypto markets?

It depends on the product and the country, and in the US the answer is split. The CFTC first found that bitcoin and other virtual currencies are commodities in 2015⁵. That gives it authority over crypto derivatives such as futures, and over fraud or manipulation in spot markets, but beyond fraud and manipulation it generally does not oversee spot exchanges⁵. The CFTC's own customer advisory says most of these cash markets are not regulated or supervised by a government agency⁹. Where a crypto-asset is a security, securities laws and the SEC come in⁷; our explainer on the SEC and the CFTC sets out the dividing line.

Structure matters too. The international Financial Stability Board warned in November 2023 about multifunction crypto-asset intermediaries: firms, like FTX before its collapse, that combine a trading platform with market making on their own venue, lending, token issuance and investment arms¹. In traditional finance those roles are usually split between different entities, or restricted, to limit conflicts of interest¹.

What do beginners get wrong about crypto markets?