Bitcoin market manipulation theory debunked | Information Age

The theory that Bitcoin’s price surge of 2017 was the result of an individual manipulating has reportedly been debunked by specialist cryptocurrency researchers who claim it is “unconvincing”.

Earlier this month, two academics – University of Texas professor John Griffin and Ohio State University’s Amim Shams – published an academic paper claiming that a lone actor was able to cause the price of Bitcoin to surge once it fell below a certain threshold.

They claimed this market manipulation by a sole actor led to the Bitcoin surge of 2017 which saw its price rise to $US20,000 and its market cap hit $US326 billion, dubbed the “one whale theory”.

The theory claims the market manipulation was done by the purchasing of Tether, a stable coin cryptocurrency meant to hold its value at $US1, on exchange platform Bitfinex.

The academics found that Bitcoin purchases on Bitfinex using Tether increased whenever Bitcoin’s value fell below a certain point, claiming this showed that the rapid rise of Bitcoin was the result of one actor on Bitfinex.

But this theory has now been debunked by cryptocurrency analytics firm LongHash, who claim that the idea that one person caused the price surge of Bitcoin is unconvincing.

The researchers calculated a metric dubbed “Tether Purchasing Power” – the market cap of Tether divided by the market cap of Bitcoin – to determine whether Tether could have been used to manipulate the price of Bitcoin.

They found that the market manipulation power of Tether increased up until the American summer of 2017 and then decreased until the end of the year.

It also rapidly increased when the price of Bitcoin fell, peaking at the end of last year.

“This suggests that even if Tether were indeed manipulating the market, its ability to do so actually is strongest when the Bitcoin price falls,” the LongHash researchers said.

“This contradicts the claim that Tether issuance drove the 2017 bull market.

“The supply of Tether…

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