Bitcoin now hovers round $6,300, however not way back it had spiked to just about $20,000 per coin. Skeptics have questioned how such an increase was even potential, and a paper authored on the University of Texas suggests a reasonably affordable reply: value manipulation!
Specifically Amin Shams and Professor John Griffin’s 66-page paper appears to be like on the relationship between Bitcoin and Tether, a “stablecoin” supposedly backed by and pegged to the US greenback. The paper, as summarized within the New York Times, “identified several distinct patterns that suggest that someone or some people at [Bitfinex] successfully worked to push up prices when they sagged at other exchanges,” utilizing Tether because the mechanism to inflate these costs.
The paper additionally speculates that “if Tether is pushed out to other crypto exchanges rather than demanded by investors with dollars in hand, Tether may not be fully backed by dollars when issued,” one thing critics of Tether have lengthy suspected. The costs of so-called “alt-coins” are usually strongly correlated to the worth of Bitcoin, that means that if the manipulation described within the paper is discovered to be correct, it has bitter ramifications for the market as an entire.
Speculation has lengthy held that Bitcoin’s worth was being propped up by Tether—and Gizmodo discovered sudden rebound within the former’s value in February coincided with a sudden inflow of Tether being added to the market. Tether and coin alternate Bitfinex, each owned by father or mother firm iFinex, had been subpoenaed by the Commodities Futures Trading Commission in December.