Tuesday, 16 October, 2018

"Is Bitcoin [BTC] really Un-Tethered?" - John Griffin and Amin Shams

The bitcoin price on Wednesday.      Markets Insider The bitcoin price on Wednesday. Markets Insider
Ginger Lawrence | 14 June, 2018, 12:56

Researchers at the University of Texas say bitcoin's price peaks previous year were down to artificial inflation.

John Griffin and Amin Shams, in their research article, 'Is Bitcoin really Un-Tethered?' aim to investigate the relation between Bitcoin, other cryptocurrencies, and Tether, a cryptocurrency purportedly clinched to the US dollar that carries more transaction volume than dollars. The prices climbed faster on exchanges the dealt in Tether than on those that didn't. The exchange, which is registered in the Caribbean with offices in Asia, was subpoenaed by USA regulators shortly after articles about the concerns appeared in The New York Times and other publications. They were able to find several patterns that suggested someone or some people successfully pushed up bitcoin prices while they dipped at other exchanges.

Tether, a cryptocurrency supposedly pegged to the USA dollar, allowed cryptocurrency owners to use a "stable digital currency" within the volatile cryptocurrency market.

In an interview with the New York Times, Professor Griffin emphasized that these types of transactions played a large role in last year's massive bull run.

"Bitfinex nor Tether is, or has ever, engaged in any sort of market or price manipulation", Bitfinex CEO JL van der Velde told Bloomberg in an e-mailed statement.

Griffin's study didn't have access to email, texts or other communications that would provide evidence that both organizations were involved in price manipulation, but instead analyzed transaction records stored on Bitcoin's public ledger.

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BTC/USD is changing hands at $6,480, the price of the digital coin No. 1 recovered strongly from a new low reached late on Wednesday at $6,154.

Why did Bitcoin and several other cryptocurrencies suddenly balloon in value past year? This method is not conclusive, but it has helped government authorities and academics spot suspicious activity in the past.

According to Griffin, Tether coins are created in large quantities, such as 100m. However, the currency may have had another shady goal; large amounts of Tether were also used buy Bitcoin, which propped up its value, the researchers claim.

On Monday, researchers from the University of Texas at Austin published a study indicating that Tether was used to unduly influence bitcoin's 2017 ascent.

Philip Gradwell, the chief economist at Chainalysis, a firm that analyses blockchain data, also said the study "seems credible".