More and more voices are talking about the possibility that prices of cryptocurrency were manipulated in 2017, causing the huge rise. The last analysis comes from the University of Texas at Austin and reveals several distinct patterns in trading that suggest several people or a person behind the Bitcoin prices, according to The Verge.
The report shows that Bitfinex may have used their own the virtual coin Tether to generate fake demand for Bitcoin thus keeping the price up. The conclusion was that the more Tether entered the market, the higher cryptocurrency prices would rise, similar to the inflationary effect of printing additional money.
The algorithms used to analyze millions of transactions discovered that half of Bitcoin’s price increase from 2017 occurred hours after Tether was passed along other exchanges and Tetherusually exchanged hands when Bitcoin’s price was flagging.
The report can’t confirm the price manipulation, but it does show suspicious patterns, a pattern that disappear after Bitfinex cut the supply of Tether. Bitfinex is a Hong Kong based company, registered in Caribbean, so the US authorities can only step in when investors from US are involved.
In December, the US Commodity Futures Trading Commission subpoenaed Bitfinex and the company Tehther, after investors expressed concern over the price manipulation issues. Recently, the Department of Justice started to investigate Bitcoin and price manipulation.
The suspicions over Bitfinex and Tether are vast. The company claimed that all of its coins are backed by USD held in reserve or other fiat currencies, but it has never provided any hard evidence for thins. Tether market capitalization is USD 2.5 billion, according to CoinMarketCap.com.
So far, Tether did not admitted any involvement in cryptocurrency prices and said that Tether issuances can’t be used to prop up the price of Bitcoin or any other currency.
This “scam” usually means that some investors can buy the exchange instrument and the push the price up so it can be sold at a much higher quotation. After the drop the instrument, in this case the cryptocurrency, can be bought back at a much lower price.
Bitcoin price was around USD 900 in January 2017 and after a huge rally went up to USD 19,500 in December. This year the trend went down and today the price is around USD 6,500.
The post A University of Texas report shows Bitcoin’s price was manipulated to grow in 2017 appeared first on Business Review.