Researchers just made their claims about market manipulation in winter 2017 louder. They are now claiming that a single whale was responsible for Bitcoin’s historic price surge. This was reported by Bloomberg on November 4th 2019.
John M. Griffin and Amin Shams of the universities of Texas and Ohio respectively have updated their previous research, which made the case that market manipulation was allegedly behind Bitcoin’s bull run to an all-time high of $20,000 in December 2017.
Griffin and Sham’s analysis, first published in a research paper in June 2018, argued that transaction patterns on the blockchain suggested Tether had been used to provide price support and manipulate the Bitcoin market:
“Purchases with Tether are timed following market downturns and result in sizable increases in Bitcoin prices. The flow is attributable to one entity, clusters below round prices, induces asymmetric autocorrelations in Bitcoin, and suggests insufficient Tether reserves before month-ends.”
They argued that these patterns supports a “supply-based hypothesis of unbacked digital money inflating cryptocurrency prices.”
In an update to their previous research, they are making their argument stronger, which is set to be formally published in a forthcoming peer-reviewed paper for the Journal of Finance.
The duo are arguing that their analysis of Tether and Bitcoin transactions from March 1st, 2017 through March 31st, 2018 makes their view that a single entity transacting via Tether’s sister firm, crypto exchange Bitfinex is behind the manipulation stronger.
“This pattern is only present in periods following printing of Tether, driven by a single large account holder, and not observed by other exchanges.”
“Simulations show that these patterns are highly unlikely to be due to chance. This one large player or entity either exhibited clairvoyant market timing or exerted an extremely large price impact on Bitcoin that is not observed in aggregate flows from other smaller traders.”