Research: Last Year’s Bitcoin Rate Growth Was Artificial

June 14, 2018

On June 13 Finance professor at the University of Texas John Griffin together with a graduate student Amin Shams has published an article to prove that Bitcoin rate growth last year was a result of a planned price manipulation campaign, not real investor interest.

Professor Griffin studies token flows at Bitfinex crypto exchange and found out some patterns that indicate, certain group of exchange users manipulated the prices and triggered their growth while crypto rates were on decline on other platforms. To do so they used Tether (USDT) pairs that was created and sold by Bitfinex.

“There were obviously tremendous price increases last year, and this paper indicates that manipulation played a large part in those price increases,” he said.

The authors cite to the public data on blockchain transactions, not specific documents. Griffin and Shams studied streams and learned, a half of the Bitcoin rate growth was caused by the inflow of USDT tokens to other exchanges when BTC price went down.

It is noteworthy that Bitcoin price at the exchanges supporting USDT tended to grow faster than anywhere else. The trend ceased when Bitfinex stopped issuing new Tether at the end of the last year.

The article got positive reviews from professor at the University College London Sarah Meiklejohn who also conducted a research to find out some regularities, and the chief economist at Chainalysis Philip Gradwell. Meiklejohn said, the work by Griffin and Shams looks good to her, while Gradwell noted soundness of the study and added, deeper analysis is needed to get better understanding of the patterns.

The article was also approved by professor at the Massachusetts Institute of Technology Christian Catalini who said, the correlation between USDT and BTC for several months seemed strange to the crypto community and added, he was glad there appeared the work on possible manipulations.

Note that this was not the first study aimed at finding crypto market manipulations. As the beginning of the year Israeli and American researchers have come to conclusion that in 2013 Bitcoin price has risen almost 10 times due to a single person who executed rate manipulations via two bots on the most popular crypto exchange on that moment Mt.Gox.

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