New storm clouds are brewing over the global digital currency Bitcoin. A study by US financial economics professors John Griffin (University of Texas) and Amin Shams (Ohio University) is now fueling the suspicion of a massive manipulation of the Bitcoin course in 2017, where the value of a Bitcoin has risen to nearly $ 20,000.
Financial professors John Griffin and Amin Shams, lecturers at the University of Texas and Ohio State University respectively, analyzed over 200 gigabytes of data about the transaction history between Bitcoin and Tether, another digital currency. Tether is an asset known as "stablecoin" whose trading value is (partially) linked to the US dollar. The study of the professors revealed that the tethers traded against bitcoins had a mysterious pattern.
"We find that the identified patterns are not present in other streams - and almost all of the price impact can be attributed to a major player", wrote Griffin and Shams. "We map this data across both blockchains and find that a large player is behind most of the patterns we document". The manipulation occurred when Bitcoin rose to an all-time high of nearly $ 20,000 in late 2017, according to the study. Griffin and Shams were able to trace the data clusters back to a source. According to the two professors, it is "a big account at Bitfinex", one of the world's leading digital currency exchanges. The Wall Street Journal first reported the results of the updated study in early November.
The study is another setback for the crypto market. Just recently, a report from investment firm Bitwise revealed that 95 percent of all trading volumes in Bitcoin exchanges are fictitious.
"Big Player" should have dominated price history with transactions
The two financial analysts had analyzed more than 200 gigabytes of transactional data, focusing on the two digital currencies Bitcoin and Tether and the trading history between them.
The trading pattern suggests, according to Griffin and Shams, that the course of the Bitcoin in 2017 in correspondence with Tehter could be assigned to a single "big player". The starting point could be a large account at Bitfinex, one of the leading digital currency exchanges, for alleged price manipulation.
As if that were not enough, other studies also tinker with digital money transactions. A recent study by the investment house Bitwise suggests that 95 percent of trading volumes on Bitcoin exchanges are not genuine.
The study comes after an analysis published in March found that 95% bitcoin spot trading is faked. The survey, created by cryptocurrency asset manager Bitwise for the SEC, found that only $273 million of about $6 billion in average daily bitcoin volume was legitimate.