New Research Claims Bitcoin Price was Artificially Inflated
According to the New York Times, a concentrated campaign of price manipulation may have accounted for at least half of the increase in the price of Bitcoin and altcoins last year. John Griffin, a finance professor at the University of Texas, and Amin Shams, a graduate student published a 66 page paper looking at the flow of digital tokens going in and out of Bitfinex and the amount of Tether being purchased after market downturns.
From the abstract of the research paper:
This paper investigates whether Tether, a digital currency pegged to U.S. dollars, influences Bitcoin and other cryptocurrency prices during the recent boom. Using algorithms to analyze the blockchain data, we find that purchases with Tether are timed following market downturns and result in sizable increases in Bitcoin prices. Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in Bitcoin and 64% of other top 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.
Binance Plans to Begin Fiat-Crypto Trading
One of the larger cryptocurrency trading platforms, Binance, has revealed plans to allow fiat-crypto trading this year through a separate Malta-based exchange. According to CoinTelegraph, the exchange will “soon allow customers to convert digital tokens into fiat currencies”. However, a Binance representative clarified to Cointelegraph that “Binance.com [will remain] a pure crypto-to-crypto exchange.” Binance is currently the second largest cryptocurrency exchange by 24-hour trading volume.