Bitcoin Price Manipulation: Study Suggests $2.5 Billion Tether Used to Create Artificial BTC Demand

A new investigation conducted by University of Texas researchers reveals compelling evidence that the meteoric rise of Bitcoin and other cryptocurrencies in late 2017 is linked to price manipulation executed by individuals using Tether to create artificial market demand.

Griffin, who has performed a range of forensic financial study, highlights a number of market patterns that indicate Tether was used to inflate demand for Bitcoin at critical points.

John Griffin and co-author Amin Shams correlate the timing of Tether transactions and Bitcoin price movements in the paper, identifying patterns that demonstrate less than 1% of hours in which large-scale Tether purchases occur are associated with 50% of the market movements that resulted in the rapid rise in value of Bitcoin, and 64% of the positive action expressed by other cryptocurrencies.

"These patterns cannot be explained by investor demand proxies but are most consistent with the supply-based hypothesis where Tether is used to provide price support and manipulate cryptocurrency prices."

The study found that as more Tether is printed and enters the market, cryptocurrency prices rise accordingly - in a manner "Similar to the inflationary effect of printing additional money."

Tether has recently come under fire from the cryptocurrency community for failing to execute an audit while continuing to print tokens in spite of a CTFC subpoena regarding Tether reserves.

The evidence of market manipulation presented within the study implies that after Bitfinex cut Tether supplies, manipulation patterns ended.

Bitfinex and Tether both share the same CEO - Jan Ludovicus van der Velde - and the Tether projects lists Bitfinex as a primary integrated exchange.

"Bitfinex nor Tether is, or has ever, engaged in any sort of market or price manipulation. Tether issuances cannot be used to prop up the price of Bitcoin or any other coin/token on Bitfinex."

While the Bitfinex CEO claims that Tether cannot be used to prop up Bitcoin prices, the evidence presented by Griffin in the study states otherwise.