Bitcoin, Crypto currency, Blockchain

Study: Bitcoin price manipulation through Tether demonstrated

For a long time it had become quiet around the crypto-currency Tether. The Stablecoin was a few months ago in the News, because the rumour went around that the Tether is not in the ratio of 1-to-1 with reserves in dollars is secured on a Bank account and in addition to the market manipulation was used. Now, researchers at the University of Texas have published a study that has found evidence that the USDT has been used for price manipulation Bitcoin.

Already in a previous report, we have reported in detail on the Connections between Bitfinex and Tether, the rumors and facts, as well as the dispute about the lack of coverage by reserves. In particular, the rapid development of the market capitalization of the Tether was at the time, during the Boom Phase in December, a big question mark in terms of hedging.

In addition, in particular, the Blogger Bitfinex’d heated up the rumor mill that by means of the artificially printed Tether the Bitcoin price is manipulated. In particular, in times where the market is weakening, so the accusation of Bitfinex’d, Bitfinex driven by Tether the price artificially high to encourage a Trader to invest and trade actively. This would also come Bitfinex.

Bitfinex or Tether always have the appropriate amount of US claims to have $ in any way, such as market or price manipulation made.

The U.S. Commodity Futures Trading Commission has (possibly as a result of the rumors) both companies, Bitfinex and Tether, in December, in order to provide proof that the Tether is supported by an appropriate amount of US dollars. Results, however, were not yet known.

The study on the price manipulation of Bitcoin

The rumor that Bitcoin is manipulated by the Tether in the price, has now been examined by a Finance Professor at the University of Texas, John Griffin and his Co-author, Amin Shams. The study was published today. Use of Algorithms for analysing the Blockchain data, the study finds that purchases with Tether correlate to market downturns, time and led to considerable increases of the Bitcoin prices.

Furthermore, it means that the Tether shows a sample that in key moments for Bitcoin, new Tether have been issued. According to the study, Tether was in December, a key reason that Bitcoin has reached a record price of $ 20,000. The authors write:

Tether seems to be both for the stabilization as well as for the Manipulation of the Bitcoin prices.

The potential magnitude and investigate the effect of the Tether emissions on the Bitcoin price, the study focused on the events in the period from March 2017 to March 2018, to observe where the largest combined Bitcoin and Tether Cash Flows. Overall, the authors have been able to make so 87 events. All of the events have, according to the study common to observe that, first, a negative price trend for Bitcoin. Then Tether flowed into the Bitcoin market, causing a reversal of the trend. In the study, it says (freely translated):

These 87 events make up less than 1% of our time series (over the period from the beginning of March 2017 to the end of March 2018), however, 50% of Bitcoins, income and 64% of the income of six other major crypto-currencies (Dash, Ethereum Classic, Ethereum, Litecoin, Monero and Zcash).

To increased times as a Bitcoin in the price, so Griffin took place, however, none of the 87 largest combined Cash Flows. This suggests that according to the study, the fact that Tether to protect the Bitcoin price has been used in downturns.

It is striking, according to the study, that Tether, issued by the parent company Tether Ltd., are often printed in large quantities, like 200 million. Almost all new coins have to move to Bitfinex. When the Bitcoin prices are falling after the output, the Tether used in the case of Bitfinex and other exchanges to buy Bitcoin “in a coordinated manner, which drives the price,” Griffin said to Bloomberg. According to the study, the Cash Flow is also a major, Chart-technical support points are piling up.

The study also provides the Thesis that the actual market has shifted demand for Bitcoin by tethered artificially to the top, because by USDT, an artificial demand is created.

Similar to the inflationary effect, to print additional money, this can leave the prices for the crypto-currency to rise.

The effect would then be similar to that of a Central Bank-based, inflationary currency, the new notes will be issued in order to give the market an injection of Liquidity, which is supported later by profits. Consequently, the Tether would be printed, in order to bring real investors to buy Bitcoin.

The publication of the study comes at a time when the CFTC subpoenas to the crypto currency exchanges Coinbase, Kraken, Bitstamp has sent, in order to obtain a comprehensive trading data relating to possible market manipulation.

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