The last year’s wild ride of Bitcoin was both sensational and informative at the same time. Sensational in the sense that it propelled Bitcoin and cryptocurrencies on the global stage as never before. Informative in the opposite sense that it inspires many theories about what actually happened.
The grapevine is full of conspiracy theorists. However, there are some who were betting that the exponential rise may be the result of some manipulation. Looks like those theories at least have some credence. There is a new study by University of Texas affirming this.
The Unversity’s team of Professors found that the US dollar pegged tether was used to support Bitcoin’s price. This was employed during markets down turns. The name of the professors are Amin Shams and John Griffin.
The study was published on the Wednesday. It clearly states that the professors used algorithms to analyze the data on the blockchian. The purchases were tethered with dollars and following the market downturn resulted in the increase in Bitcoin’s prices.
The study thus connected the link between the print of new tether token and Bitcoin’s wild rise after a bearish run. The paper claimed, “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.
The flow clusters below round prices, induces asymmetric auto correlations in Bitcoin, and suggests incomplete Tether backing before month-ends. ”
The research findings further asserted, “By mapping the Blockchains of Bitcoin and tether, we are able to establish that entities associated with the Bitfinex exchange use tether to purchase Bitcoin when prices are falling. Such price supporting activities are successful, as Bitcoin prices rise following the periods of intervention. ”
It was also derived that there need not be a very large amount of tether to propel Bitcoin’s prices. Even less than a single percentage of extreme exchange of tether for Bitcoin can have significant implications. The research also finds that the demand goes both ways. The rise in the prices of the Bitcoin can have significant impact over the demand of the tether as well.