Bitcoin's Major Boost Was Likely Manipulated, Research Finds

Record bitcoin price propped up by another digital currency

Twitter accounts and websites such as Tether Printer which tracks the movement of new tokens issued by Tether's central organization show that millions of dollars' worth of USDT were printed through the 2017 and early 2018 market seasons - correlated with the rise of Bitcoin and other cryptocurrencies.

That's according to explosive new research from University of Texas finance processors John Griffin and Amin Shams, best known for identifying suspicious activity in the VIX previous year.

Again, in plain language: in periods right after the bitcoin price falls and Tether mints a bunch more USDT, that's when it's clear that somebody (who could it be?!) is artificially pushing the bitcoin price back up. Price manipulation and collusion may be to blame. "The buying of Bitcoin with Tether also occurs more aggressively right below salient round-number price thresholds where the price support might be most effective". Tether is the 11th largest cryptocurrency and is pegged to the U.S. dollar.

There is evidence that tether, a digital currency pegged to the USA dollar, may have been used to manipulate the price of bitcoin BTC=BTSP and other cryptocurrencies, according to a research paper released by the University of Texas on Wednesday.

"Across the six other crypto currencies, returns are 64 percent smaller on average when removing the 87 Tether-related [purchases]", the researchers added.

Both Tether and Bitfinex have regularly come under suspicion over price manipulation in recent months.

Regulators worldwide are increasing their scrutiny of cryptocurrency markets.

"Overall, the findings indicate that Tether is closely linked to Bitcoin price appreciation, and question the objective of Tether". Bitcoin's all-time highs around $20,000 one month later - and those of major altcoins - were also a result of Tether flooding the market with coins, they say.

The CEO of Bitfinex, a cryptocurrency exchange, also runs Tether, and in December, a United States regulator sent a subpoena to both companies.

"Tether is "pushed" through a supply-driven scheme to make up a currency, convert it into Bitcoin, and then manipulate the price of Bitcoin and other cryptocurrencies.".

"(Neither) Bitfinex nor Tether is, or has ever, engaged in any sort of market or price manipulation", Bitfinex and Tether Chief Executive Officer JL van der Velde said in a statement.

In the paper, Griffin and Shams write, "By mapping the blockchains of Bitcoin and Tether, we are able to establish that entities associated with the Bitfinex exchange use Tether to purchase Bitcoin when prices are falling".

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