Tether is a crypto-currency whose value is linked to USD currencies, according to the researchers, Bitcoin and other Crypto during the recent crypto Boom is manipulated.John Griffin and Amin Shams from the College of Texas at Austin’s Finance Department, published the results of this research. There is a lot of speculation in the last 6 months, whether the Tether is really supported by nothing (the existence of the Tether held in reserves to USD has long been a hot discussion point in the crypto-world), or if it is something is supported if it is partially reserved and not supported 100% from the USD.
John Griffin and Amin Shams analyzed the Blockchain data and found that prior to the creation of Tethers, the market often prices to fall was recorded and shortly after the minting of new Tethers, rising prices listed.
Their analysis focused on the investigation of possible Manipulation of Bitcoin and other major Cryptocurrencies. They also examined whether the growth of a-linked crypto-currency, Tether, is primarily driven by the demand of the investors or to investors will be delivered in order to benefit from the rising prices of the crypto-currencies.
Researchers stated that:
“Through the analysis of the Blockchains of Bitcoin and Tether, we can conclude that the entities that are associated with the Bitfinex exchange, use Tether to buy Bitcoin when prices fall. Such price support activities are successful, because the Bitcoin-prices rise after the intervention periods. These effects are only after negative returns and periods after the embossing of the Tether.“
According to them, less than 1% of the hours are with such a heavy Tether-transactions with 50% of the meteoric rise of Bitcoin, and 64% of the other Top crypto-currencies. This pattern can not be with investors demand to explain, but most likely with the supply-based hypothesis is compatible with the Tether to the price support and Manipulation of the crypto-currency prices is used.
They collected and analyzed first, the Tether and the Bitcoin Blockchain data through a series of Algorithms. Then, they implemented these data in order to reduce the complexity of the analysis of the Blockchain. In particular, due to the Semitransparency of the transaction history recorded on the Blockchain, they were able to use variants of methods developed in computer science [Meiklejohn et al. (2013) and Ron and Shamir (2013)] for the grouping of related Bitcoin Wallets.
In brief, their results support the view that price manipulation currencies significant effects in the case of Crypto. These results suggest that the Monitoring of the capital market may be necessary, in order to obtain a truly free market. Their results also, the historical Narrative does not support that dubious activities of the price increase are only a by-product, but the distortion is much price and Capital misallocations may contribute.