Bitcoin’s massive rise over the past year may have been more than just investor enthusiasm. Unadjusted price manipulation accounted for at least half of the Bitcoin price spike, according to a study released on Wednesday.
Researchers from UT Austin and UT Austin investigated millions of transactions on the Bitfinex cryptocurrency market to uncover financial wrongdoing. To “stabilize and influence” bitcoin’s price, the author determined that tether utilizes to buy bitcoin throughout important phases of bitcoin’s downturn.
Griffin told CNBC that fraud and manipulation often leave imprints in data, thus blockchain can assist monitor things.
Griffin discovered tether uses to acquire bitcoins following a massive price drop by tracking Bitfinex transactions on a public ledger.
He stated that this created price support for Bitcoin. And it had a significant impact on its price during the period they were studying. Their research will show that there are people who use investor interests to their advantage.
Griffin discovered that 87-hour tether transactions, or approximately 1%, may explain 50% of Bitcoin’s growth and 64% of other major cryptocurrencies’ growth.
According to CoinDesk, Bitcoin fell below $1,000 last year in December before soaring to nearly $20,000. The first and most well-known cryptocurrency in the world lost its value to more than half. Trading at around $6,252 on Wednesday afternoon this year.
Tether lacks transparency
The company where the digital currency issues, Bitfinex and cryptocurrency company Tether, are why some in the industry get concerned.
A software engineer and blockchain analyst at Bespoke Investment Group, Dan Ciotoli said that it considers red flags if Tether is lacking transparency. It is also possible that the issuance of Tether caused important contributions to bitcoin prices in the previous year.
The Commodity Futures Trading Commission submitted a subpoena to Bitfinex and Tether in December. In 2016, the CFTC penalized Bitfinex $75,000 for refusing institutional registration and proposing to trade “illegal” cryptocurrencies. Hackers stole 119,756 bitcoins from exchanges in the Caribbean a few months after.
Griffin has spent the last decade researching lender fraud, bank mortgage fraud, and most recently the VIX volatility indicator.
As of the moment, Griffin is focusing on the market of cryptocurrency which he said was not being well-supervised.
He also said he analyzes things that may not be legal, and there are many stories that cast doubt on cryptocurrencies. Which is why it is vital to look at the statistics.