Researchers: Bitcoin Spike Triggered By Tether

Hook, line and sinker, amid bulls and whales.

The days of bitcoin at $20,000 seem long ago and far away. That was nearly two years ago.

And it may have all been a big splash caused by a big whale who in turn sparked a running of the bulls.

We’ll use the animal imagery sparingly from this point on.

News comes that two academics have stated that the huge swing upward in the marquee cryptocurrency’s price has in fact been tied to market manipulation. Those two researchers, John M. Griffin, who serves as professor of finance at the University of Texas, and Amin Shams, finance instructor at the Ohio State University, said this month — building on research from June of 2018 — that the outsized gains came from a single entity.

The pair had said in the past, as detailed via Bloomberg, that analyzing transactions across the blockchain show that the whale would have been able to send bitcoin prices higher if and when they slipped below certain levels.

And in terms of mechanics, the transactions that helped send bitcoin soaring were reliant on Tether, a digital token that in turn had been pegged to the U.S. dollar. Tether, the academics contend, had been used to provide some pricing support for bitcoin across Bitfinex, an exchange in turn owned and operated by the same executives tied to Tether.

“Our results suggest instead of thousands of investors moving the price of Bitcoin, it’s just one large one,” Griffin said in an interview with Bloomberg. “Years from now, people will be surprised to learn investors handed over billions to people they didn’t know and who faced little oversight.”

Griffin and Shams have said that Tether was created without dollars in place to “back” it and the Tether was in turn used to buy bitcoin, driving it up.

“This pattern is only present in periods following printing of Tether, driven by a single large account holder, and not observed by other exchanges,” the researchers wrote in…

Source Link