Manipulation, according to a study:
The rise of bitcoin at the end of 2017 and several other cryptocurrencies could come from price manipulation, say the authors of a study published on Wednesday, confirming the concerns of some market participants. The instrument of fraud: Tether, a crypto-currency developed by Bitfinex, is one of the leading trading platforms. Its peculiarity is to have a price tied to the dollar, its founders committing themselves to issue a leash only in exchange for a dollar, which can be recovered at any time.
So there would be as much rope in circulation as there are dollars in the coffers of the issuing company. What’s the point of this cryptocurrency? To be able to facilitate and speed up exchanges using a virtual currency rather than a traditional one. But according to a study published by John Griffin, professor of finance at the University of Texas, and Amin Shams, a graduate student, the tether could mainly be responsible for the rise in the prices of another cryptocurrency, including the most famous, the bitcoin, reached a value of 19,500 dollars in December, before falling back around the 6,500 dollars currently.
The authors found that large purchases of tethers followed periods of decline in the leading virtual currency and that they “resulted in considerable increases in the price of bitcoin.” The study, carried out between March 2017 and March 2018, focuses on the Times When significant transactions were carried out in both tether and another cryptocurrency. “Less than 1% of the hours with such transactions in tethers is associated with 50% of the explosive rise of the bitcoin and 64% of those of the other major cryptocurrencies,” they summarized, specifying that such a configuration had not been repeated in 10,000 random simulations. The study suggests that Bitfinex may have issued more tethers than requested, which some commentators have suspected for several months.
“The issue of tethers could significantly drive up cryptocurrency prices by generating artificial demand for them,” she said.
“If the bitcoin price increases, then the founders can sell the acquired bitcoins against dollars, probably at a slower pace and opaque way” to avoid a drop in prices equivalent to the rise they have caused, and rebuild their reserve of green notes.
Contacted by AFP, the company replied through its manager, J. L. van der Velde, that “neither Bitfinex nor Tether is or has been involved in any manipulation of the market” and that “the tethers broadcast cannot be used to reinforce the price of bitcoin or any other crypto active.” This is not the first time the platform has attracted suspicion. By the end of January, Bloomberg had revealed that it had been assigned by the Commodity Futures Trading Commission, the American futures and derivatives regulator.
The value of Bitcoin at this time
The cryptocurrency’s King seems to be doing relatively well at the beginning of this month. It seems to be going up to at least $ 10,000 right now. When it reaches $ 20,000, that’s when things will probably take off, and Bitcoin will dominate again. When this happens, many more people will be interested in investing their time and money in Bitcoin.