The Bitcoin exchange rate was a marked increased in the last years always jump. This took researchers to the occasion and in the Journal of Monetary Economics, a study with the title “Price Manipulation in the Bitcoin Ecosystem”. The Team has found out that the price increase from $ 150 to over $ 1,000 was controlled at the end of 2013, probably due to Manipulation by Bots.
As Techcrunch has previously reported, researchers Neil Gandal, JT Hamrick, Tyler Moore, and Tali Oberman for the investigation data from the year 2013 from the defunct Mt. Gox exchange is evaluated, one of the world’s largest trading places for Bitcoins at the time mentioned.
In particular, the period between November and December 2013 was in the focus of the investigation, since the price of a Bitcoin, within these two months, climbed several times to top. The Team has found out in the study that a price manipulation to the affected time was very possible, as the market was still very strong capital and by a few large investors dominated.
According to the study, the Manipulation was carried out mainly on two Bots, i.e. computer programs that took the trade with Bitcoin automatically. Curiously, in this context, is that Markus and Willy, as the researchers called the Bots, although valid Trades at the Mt. Gox exchange to make could have possessed, however, not a single Bitcoin. The volume of trading on the stock exchange Mt. Gox was thus falsified.
This signaled to the market that you have strong trading activity. This, in turn, enabled “real” investors and provided for increased trade. This is the results of the investigation show at least. On days when the Bots were active, increased the average volume of trading on all major exchanges. On the days where the Bots were not active, was the volume of trade is lower. The rate tended to be higher on these days down. On days with increased volume of trade, manipulated by the Bots, it increased the Bitcoin rate by an average of 4 percent.
Thus, according to the researchers, could rise by the end of 2013, the Bitcoin exchange rate, within two months from around $ 150 to more than $ 1,000. In December 2013, the price then crashed below $ 600, probably after the Unknown could sell behind the Bots some of the Bitcoins at the then all-time high. This will not be discussed in the study, however, closer.
Mt. Gox benefited but, in fact, directly from the increase in trading volume on the transaction fees of the exchange. In February 2014 the largest Bitcoin happened then Hack the history: of 650,000 BTC were from Mt. Gox stolen, and Mt. Gox ceased its operation a short time later.
Finally, the researchers noted that many of the smaller crypto-currencies, even today, prone to price manipulation could be. For investors, therefore, is not to understand from our point of view, it is very important that the crypto-currency market follows the “traditional” rules of the established financial markets. Investments should be well thought out, since manipulations are possible at any time. Important here is especially the crypto-currency is to be understood, to be invested in and not to invest blindly in Coins, the possible profit opportunities.
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