Tether (USDT) & Bitcoin (BTC) – A new study has surfaced this morning putting Tether in the negative spotlight once again. Last December, Tether was subpoenaed by the U.S Commodity Futures Trading Commission to provide proof that the digital currency was in fact back by a reserve of U.S. dollars. Bitfinex was also subpoenaed due to it losing banking relationships, but continued to remain operational.
CEO of Bitfinex, JL van der Velde, spoke out against the accusations last year in an emailed statement and said:
“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.”
Around this time, Bitcoin (BTC) reached its record high of $20,000 a coin, and these events are what prompted John M. Griffin and Amin Shams from the University of Texas Austin Department of Finance to investigate Tether’s movement.
>> Is Day-Trading Ruining Bitcoin (BTC)?
“Is Bitcoin Really Un-Tethered?”
The 66-page research paper suggests that shows that Tether was “used to provide price support and manipulate cryptocurrency prices.” The paper claims that half of Bitcoin’s price rise within December 2017 was due to Tether and its issuer Bitfinex.
The research paper says:
“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.”
Griffin said in an interview that he’s “looked at a lot of markets” and manipulation in a market leaves tracks in the data. The data tracks with Tether are “very consistent” with a manipulation hypothesis.
Griffin and Shams’s paper has been downloaded a total of 2,780 times today and currently has 7,645 abstract views. What will become of the research remains unknown at this time, but Tether (USDT) just passed DASH and Monero to become the 12th largest cryptocurrency by its market cap.