A study released by the University of Texas claims that Bitcoin price manipulation occurred last year, featuring the Tether cryptocurrency, during the virtual currency’s massive bull run.
The current Bitcoin price is on the minds of every hodler at the moment. The number one cryptocurrency by market cap has failed to break out of its recent doldrums. 2018 has been a harsh year for Bitcoin as its value has fallen from almost $20,000 in mid-December to the current price of $6,703.
The End of 2017 Was Exciting
The last few months of 2017 was gripping for Bitcoin enthusiasts. The value of the cryptocurrency shot up remarkably, breaking barriers of $10K, $15K, and beyond. Yet a study released by the University of Texas says that the exciting bull run was the result of manipulation.
Finance professor John Griffin and grad student Amin Shams pored over blockchain purchases from that time and found something interesting. In their opinion, the Tether cryptocurrency served to inflate the price of Bitcoin. They say that major Tether buys were timed to stabilize Bitcoin’s floor following market downturns.
In the study, they state:
These patterns cannot be explained by investor demand.
Further Manipulation
The two researchers also say that the Wall Street volatility index, VIX, was manipulated as well. Their research serves as the basis for an ongoing lawsuit. The suit claims that traders made bets on the S&P before VIX settlement auctions in order to manipulate the market.
Whether that suit has merit, we’ll leave up to the legal scholars. However, the US Department of Justice opened an investigation last month on Bitcoin price manipulation by traders.
The investigation is focusing on the illegal use of spoofing and washing. Spoofing is the practice of flooding the market with fake orders while washing is when a scammer trades with themselves in order to create an impression of market demand. The DOJ is working with the Commodity Futures Trading Commission on the criminal probe.
You can be sure that the DOJ will be taking a keen look at the University of Texas study. It will be interesting to see how the investigation pans out. It will be a blow to crypto enthusiasts if it turns out that the price of Bitcoin was manipulated.
Do you think that there’s been Bitcoin price manipulation? Let us know in the comments below.
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