Record bitcoin price propped up by another digital currency

Really Un-Tethered?’ Bitcoin Price Manipulation Returns With New Research

Really Un-Tethered?’ Bitcoin Price Manipulation Returns With New Research

What is interesting is that Griffin and Shams's paper describes Tether as being primarily used by Bitfinex, a major crypto-exchange, to purchase Bitcoin tokens from two other exchanges and most importantly did this only after periods of Bitcoin price declines.

As CCN reported, Tether has increasingly come under scrutiny as the tether token's market cap has swelled over the past calendar year. In the last 24 hours, bitcoin has fallen almost seven percent, according to CoinMarketCap. This has been widely rumored within the cryptocurrency community for ages, but the study lends an air of academic credibility to the claims.

Bitfinex CEO J.L. van der Velde told CNBC that neither the exchange nor tether helped to boost bitcoin prices.

The researchers found that tether issuances rose past year during periods when the price of bitcoin was dropping.

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. And, in January, Tether parted with its auditor, Friedman LLP.

"These effects are present only after negative returns and periods following the printing of Tether". The prices climbed faster on exchanges the dealt in Tether than on those that didn't.

250 Million Tether Grant Here we Go Again

With intentions to investigate the price outsets of Tether to Bitcoin, they choose the sample of 87 of the largest purchases of Bitcoin with Tether from March 2017 to March 2018.

In their report "Is Bitcoin Really Un-Tethered?" That's probably because these price levels might be psychologically important.

"Proxies for Tether demand receive little support in the data", Griffin and Shams add, "but our results are consistent with the supply-driven manipulation hypothesis".

"When prices are falling, the Tether creators can convert their Tether into Bitcoin in a way that pushes Bitcoin up and then sell some Bitcoin back into dollars to replenish Tether reserves as Bitcoin price rises", the researchers wrote.

"Overall, our findings provide substantial support for the view that price manipulation may be behind substantial distortive effects in cryptocurrencies", they said.

To prevent future price manipulation, the researchers say that "external capital market surveillance and monitoring" may be necessary to keep the market free from tampering.