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New Research Claims Bitcoin Price was Manipulated using Tether in 2017

15 June 2018
New Research Claims Bitcoin Price was Manipulated using Tether in 2017

Academics at the University of Texas at Austin on Wednesday published a paper analysing whether the cryptocurrency Tether "influences Bitcoin and other cryptocurrency prices during the recent boom."

"Using algorithms to analyse the blockchain data, we find that purchases with Tether are timed following market downturns and result in sizeable increases in Bitcoin prices", stated the study.

"By mapping the blockchains of bitcoin and tether, we are able to establish that entities associated with the Bitfinex exchange use tether to purchase bitcoin when prices are falling". In fact, with BTC now languishing below $6,500, even five figures feels like a long way off.

The product of two researchers at the University of Texas, the paper - titled Is Bitcoin Really Un-Tethered? - claims to have identified potential evidence of direct price manipulation since November 2017.

Specifically Amin Shams and Professor John Griffin's 66-page paper looks at the relationship between Bitcoin and Tether, a "stablecoin" supposedly backed by and pegged to the United States dollar.

Writing in a 66-page report titled "Is Bitcoin Really Un-Tethered?", Griffin and Shams argue that tether, a "stablecoin" that is allegedly backed by Dollars at a 1:1 ratio, has been repeatedly used to provide price support for bitcoin during market downturns. "Such price supporting activities were successful, as bitcoin prices rose following the periods of intervention". The author of that report conceded, however, that only a complete audit of tether would settle the matter once and for all.

The flow clusters below round prices, induces asymmetric autocorrelations in Bitcoin, and suggests incomplete Tether backing before month-ends. This feat is due to the decline of the cryptocurrency market in general, which now stands at $273 billion. Other digital currencies like Ethereum and Litecoin soared at around the same time by as much as 64 percent.

Critics of tether have raised concerns over the past year about whether Tether Limited actually holds $1 in reserve for each tether issued, as it claims. At 66 pages, and complemented by meticulous charts, citations, and algorithmical analysis, the authors of today's report have produced the most comprehensive tether investigation to date. "These findings suggest that external capital market surveillance and monitoring may be necessary to obtain a market that is truly free", they conclude.

"There were obviously tremendous price increases past year, and this paper indicates that manipulation played a large part in those price increases". Let us know in the comments section below.