Last year, the popular cryptocurrency coin Bitcoin reached tremendous levels that no one would have ever thought of. Now, researchers decided to take a look at the situation and discovered price manipulation was part of the situation. They performed a blockchain analysis and saw a different type of digital coin, Tether, helped Bitcoin increase its value so much between March 2017 and March 2018.
Tether likely boosted the value of Bitcoin
Cryptocurrency can experience sudden increases in its values, but how is it possible? Researchers suggested Bitcoin faced such a surge due to price manipulation by other currency types, like Tether. Researchers from the University of Texas decided to explore the situation looked at a few blockchain transactions involving cryptocurrency.
This way, they found out how Tether pumped up Bitcoin’s value. Soon after the price of the latter drops, they identified several transactions where someone used Tether to buy Bitcoin. Most probably, those responsible for it were Bitfinex. This company was the creator of Tether who used the coin to perform a clever price manipulation on Bitcoin.
Bitfinex most likely got involved in price manipulation techniques
Based on the researchers’ discoveries, the artificial intervention is clear. There have been more Tether transactions for Bitcoin than dollar transactions. Also, since they occurred immediately after the price of Bitcoin dropped, it’s clear this happened on purpose. Researchers also compared this with other types of cryptocurrency. Those that didn’t perform Tether transactions were at a much lower level.
At the beginning of this year, Bitfinex has stopped issuing Tether. Before this cryptocoin was on the market, there were no such transitions in the value of Bitcoin. Also, when the issuing stopped, the transitions stopped as well.
The study doesn’t work as flawless proof that Bitfinex performed price manipulation. However, the evidence it offers is quite strong. Soon after the observations, the US Commodity Futures Trading Commission issued this exchange in court. Researchers from the University of Texas also published the study in an online version.
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