Bitcoin's soaring value down to manipulation, scientists claim

Bitcoin Price Peak of Last Year Propelled by Manipulation New Research States

On Monday, researchers from the University of Texas at Austin published a study indicating that Tether was used to unduly influence bitcoin's 2017 ascent.

The researchers noted that the "bitcoin reversal did not exist before Tether was prevalent in the market and disappears during the period when Tether stops being printed".

With intentions to investigate the price outsets of Tether to Bitcoin, they choose the sample of 87 of the largest purchases of Bitcoin with Tether from March 2017 to March 2018. Evidence of price manipulation was found in all of those, too.

While there is little public information on about how Tether was created, it generally exchanges for around $1 as each coin is supposed to be backed by $1 of fiat money in a bank.

Days after Tether (USDT) gained a higher market cap than Monero and Dash, new research has reignited suspicions that the altcoin "manipulated" Bitcoin prices. Bitfinex stopped issuing Tether earlier this year, though the currency, the value of which is pegged to the United States dollar, is still trading in large volumes. These purchases alone accounted for 50 percent of the cryptocurrency's compounded gains, when its value skyrocketed from $1,200 to around $10,000. "Due to the semi-transparent nature of the blockchain, we are able to use extensive algorithms to lump nodes of investors and match transactions on the Tether Blockchain to those on the Bitcoin Blockchain". Other digital currencies like Ethereum and Litecoin soared at around the same time by as much as 64 percent. Their paper seems to confirm what many have believed for months, if not years, that cryptocurrency markets are susceptible to manipulation.

Bitcoin Price Peak of Last Year Propelled by Manipulation New Research States

The US Commodity Futures Trading Commission allegedly sent Tether - as well as cryptocurrency exchange Bitfinex, with whom it is closely affiliated - a subpoena in December, though it is not clear whether that investigation has or will result in any enforcement action.

Bitfinex has denied being involved in any price manipulation schemes.

"When prices are falling, the Tether creators can convert their Tether into Bitcoin in a way that pushes Bitcoin up and then sell some Bitcoin back into dollars to replenish Tether reserves as Bitcoin price rises", the researchers wrote.

"Bitfinex nor Tether is, or has ever, engaged in any sort of market or price manipulation", Bitfinex CEO JL van der Velde told Bloomberg in an e-mailed statement.

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