"Is Bitcoin [BTC] really Un-Tethered?" - John Griffin and Amin Shams

Record bitcoin price propped up by another digital currency

Tether Manipulation Pushed Up Bitcoin's Price, Researchers Find

Bitcoin's meteoric price rise may have been down to price manipulation using another virtual currency, researchers have suggested.

"Tether seems to be used to stabilize and manipulate Bitcoin prices", said Professor John Griffin and Amin Shams in their research paper.

"Tether issuances can not be used to prop up the price of Bitcoin or any other coin/token on Bitfinex", Jan Ludovicus van der Velde, Bitfinex's chief executive, said in a statement.

Research shows, that Bitcoin price was inflated artificially.

New research claims that a trio of cryptocurrency exchanges likely inflated Bitcoin's value by buying it up whenever the price began to fall.

"We investigate whether Tether is primarily demand-driven from investors, or supply-driven by Tether issuers pushing the currency on the market".

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Other large virtual currencies that can be purchased with Tether, such as Ether and Zcash, rose even more quickly than bitcoin in those periods.

The US Commodity Futures Trading Commission allegedly sent Tether - as well as cryptocurrency exchange Bitfinex, with whom it is closely affiliated - a subpoena in December, though it is not clear whether that investigation has or will result in any enforcement action. The prices climbed faster on exchanges the dealt in Tether than on those that didn't. Long-time tether critic Bitfinexed has been alleging as much for months, and successfully persuaded a portion of the cryptocurrency community that tether-led market manipulation was rampant. In a nutshell, trades of Tether were "timed following market downturns" triggering "sizable increases in Bitcoin prices". He cautioned that a full understanding of the patterns would require more analysis. He drew attention for a 2016 paper that suggested that a popular financial contract tied to the volatility in financial markets, known as the VIX, was being manipulated.

If what the study hypothesis turns out to be true this would not be the first time Griffin has sniffed out fraud in the financial world. This, they say, may indicate a "month-end need for dollar reserves related to Tether", implying that Tether issues un-backed tokens to help buttress the bitcoin price and then sells enough BTC at the end of the month to fully back the outstanding USDT.

"It is great to see academic work trying to causally assess if market manipulation is taking place".

"There were obviously tremendous price increases past year, and this paper indicates that manipulation played a large part in those price increases".

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