Bitcoin's soaring value down to manipulation, scientists claim

  • Bitcoin's soaring value down to manipulation, scientists claim

Bitcoin's soaring value down to manipulation, scientists claim

The U.S. dollar-pegged tether has been used to support bitcoin's price during market downturns, a new study published by University of Texas at Austin professors.

John Griffin and Amin Shams, in their research article, 'Is Bitcoin really Un-Tethered?' aim to investigate the relation between Bitcoin, other cryptocurrencies, and Tether, a cryptocurrency purportedly clinched to the USA dollar that carries more transaction volume than dollars.

Critics of tether have raised concerns over the past year about whether Tether Limited actually holds $1 in reserve for each tether issued, as it claims.

Regulators worldwide are increasing their scrutiny of cryptocurrency markets.

The study focuses primarily on the supply-based explanation for the link, but the researchers also note that the demand for bitcoin can create a similar demand for tether, particularly by investors who cannot move large sums of money into cryptocurrency directly.

Both firms were subpoenaed in December by the Commodity Futures Trading Commission, which was seeking proof that Tether is backed by a reserve of U.S. dollars, as it claims. The reason for the subpoena was unclear.

"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".

"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.

Bitcoin's massive price run-up late a year ago may have been the result of a price manipulation campaign, according to a new study released on Wednesday. It was at $6,624.45 on Wednesday afternoon. They set out to know how less than 1% of hours with heavy Tether activity can explain nearly half of the meteoric rise in Bitcoin. When bitcoin was rising, the same pattern could not be found.

"Overall, we find that Tether has a significant impact on the cryptocurrency market". Executives at the company previously denied any involvement in price manipulation, The New York Times reports, though did not respond to a request for comment by the newspaper over the study.