Bitcoin's record-high 2017 price was result of market manipulation, claims study


TechSpot Editor
Staff member

A paper published by University of Texas professor John Griffin, who is famed for identifying fraud in financial markets, and graduate student Amin Shams explains how digital currency Tether may have been used to inflate the cryptos’ prices.

Tether is a token that’s directly linked to the US dollar. Each one is worth $1 and is (supposedly) backed by physical dollar holdings, meaning users can convert their real-world cash into Tether and easily spend it on digital currencies.

The report suggests that popular exchange Bitfinex, which created and sold Tether, may have used it to buy up Bitcoin and increase demand, thereby boosting its price. The paper says the more Tether that was released into the market, the higher cryptocurrency prices would rise, “similar to the inflationary effect of printing additional money.”

“By mapping the blockchains of bitcoin and Tether, we are able to establish that entities associated with the Bitfinex exchange used Tether to purchase bitcoin when prices were falling,” the report explains. “Such price supporting activities were successful, as bitcoin prices rose following the periods of intervention. These effects are present only after negative returns and periods following the printing [sic] of Tether.”

“There were obviously tremendous price increases last year and this paper indicates that manipulation played a large part in those price increases,” Griffin told The New York Times.

Bitfinex stopped issuing Tether earlier this year. It’s current market capitalization is $2.5 billion.

Jan Ludovicus van der Velde, the CEO of both Bitfinex and the company Tether, has refuted the findings. “Bitfinex nor Tether is, or has ever, engaged in any sort of market or price manipulation,” he told Business Insider in a statement. “Tether issuances cannot be used to prop up the price of Bitcoin or any other coin/token on Bitfinex.”

Bitcoin and other virtual currencies fell yesterday. From its near-$20,000 high in December, the crypto dropped to $6,107 at one point yesterday—its lowest since early February.

Bitcoin's price over the last 12 months

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J spot

TS Maniac
There's always such manipulation. But really what made the price rise where the Bitcoin Cash/Gold forks, and the intense media that happened a month or two after that.


There's always such manipulation. But really what made the price rise where the Bitcoin Cash/Gold forks, and the intense media that happened a month or two after that.
It'll be time to buy again when the media says crypto is double-plus dead.

Then when they say, "this rally is different," and ordinary people get interested in crypto again, it'll be time to sell it.

Rinse, repeat.
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TS Guru
Speculation and excitement about a new venture. Like it or not this is the new currency of the future. We are in the wild west phase of it. Today's currencies are on the verge of failing because of loose printing and manipulated values. Bitcoin will be tracking you in it's final stage.


TS Maniac
Yeah at a certain point I guess I will just have to accept that the misinformation campaigns regarding Bitcoin will never end.

But what's sad is just how many people don't realize how *****ic this "study" is lol.


TS Addict
Not true it crashed because some countries limited and or banned it.
Nope. This whole thing is manufactured. Same as banks are inflating or deflating currencies (in FOREX) and funds are inflating and deflating stocks, some other funds are inflating and deflating the bitcoin balloon. And other cryptocurrencies. With a huuuge help of media.

Didn't they constantly repeat on TV, radio, internet and everywhere, that bitcoin may reach $1,000,000? Weren't they showing new millionaires which got rich by mining or buying bitcoin? Weren't they constantly repeating that fiat money is dead and will be replaced by bitcoin?

Well... that's how you inflate the price. Tether helped, but media did 80% of the work. With media you can convince people that Assad is bad, while ISIS represents "freedom fighters". Or that we should ban smoking cigarettes, while smoking marijuana is healthy. Or that GMO food is safe and well tested. People will believe anything if it's said on TV.