… and allegedly it was a single whale that drove prices up in 2017.
A gray whale. Image by David Becke via flickr.com. License: Creative Commons
And every day greets the tether drama. An update of a study claims that a single whale has single-handedly pushed up the price 2017. The media rush to this news – while the update is not yet published and many in the crypto scene violently contradict.
A little bit you will not shake the feeling that only someone has to write words such as tether, fraud and manipulation on a piece of paper to reach the headlines of magazines and newspapers. So far, the latest uproar is actually a non-message, but mutated into a message because it haunts all media.
It’s about the following: Two scientists from Texas and Ohio have published a paper in June Tethers are so-called Stablecoins, which are covered by alleged dollars in a bank account and are now the most traded Coin on the crypto exchanges.
The study was scientifically sound, as the authors studied and evaluated the flow of bitcoins and tethers between major exchanges. However, it lacks a concrete way to see what the cause and effect is: if the bitcoin price goes down and then tethers are printed, it happens because someone wants to buy quickly, or it happens because a manipulator stops the fall would like to? And if the bitcoin price rises after tethers are printed – are the tethers then outflow of demand or manipulation?
Although the authors try to explain questions about this relationship, they do not provide a directly convincing result. This insecurity makes the conclusions of the paper speculative or intentionally pressed in a certain direction. Nevertheless, the study lends weight to the long-standing suspicion of tether manipulation.
Now there is an update of the paper in which the authors refill again, and even before it has officially appeared, it makes the rounds. The price of Bitcoin was not only manipulated by the tethers up – there is also a single big player – a so-called whale – behind it. We were all betrayed, according to the message; it was not a collective show of strength that made Bitcoin shoot up, and not a global craze for cryptocurrencies, but the manipulation of a single puppeteer; just as in Zola’s novel The Money All Over Paris was the victim of the market manipulation of Aristide Saccard, it became 2017 the whole world in the year.
Since the paper will be published in the Journal of Finance next Monday, we can not say much at this point. Bloomberg and the Wall Street Journal cite it in advance: The researchers have around 264 evaluated gigabytes of data streams. There were clear patterns of how the tethers first hit Bitfinex and are distributed from there to the ecosystem. That these patterns are regular rather than random shows the authors that this is not organic demand but fraud. In the new paper, they also explain that this pattern “is carried by a single account without being observable on other exchanges.”
The single account operates on Bitfinex, the largest crypto exchange of the observed time. The study does not say who the account might be; In an interview with the Wall Street Journal, however, one of the researchers says the account must be known and supported by the managers of Bitfinex. If it is not Bitfinex itself, then someone with whom the stock market often trades.
Tether rejects the allegations. The firm’s lawyer, Stuart Hoegner, said the paper contained “fundamental mistakes” because it was based on inadequate data. Not manipulation, but “the global rise of digital currencies” has fueled demand for tethers. The research was probably published to support a “parasitic trial”. It is “a transparent attempt to misuse the semblance of science for a grab for money.” The two scientists, while the charge of having to do with a lawsuit to have to do back. But in fact, a recently initiated class action lawsuit against Bitfinex and Tether is based exactly on this hypothesis: The company has manipulated the market with uncovered tethers. The paper of the two researchers is likely to be water on the mills of the lawsuit.
Large parts of the crypto scene categorically reject the theory of the one who manipulated prices. Finally, it was obvious that there was a global demand for bitcoins and other cryptocurrencies. Numerous exchanges had to suspend the registration of new customers, because the onslaught on the cryptocoins brought their servers to shaky.
The magazine Decrypt.co headlines “No, it was not a single whale that caused the rise of Bitcoin 200”. Quoting Mati Greenspan, eToro analyst, who says, “There is no methodology on this planet that will convince me that this narrative is accurate. On eToro, millions of accounts have been opened to trade crypto. That can not have been triggered by a single whale. “Gabor Gurbucs of VanEck (a Bitcoin ETF that still hangs on the regulatory threshold), rejects the scientists’ conclusion with sharp words. “I continue to be disappointed that career researchers are failing to understand the foundation of Bitcoin and Krypto’s market structure or the foundations of cause and effect. The rise of tether is a result of organic demand for bitcoin and crypto in a period of hyper growth. ”
The magazine Cryptoslate also quotes Ari Paul, the co-founder of BlockTower Capital: To claim that the bubble 2017 was fabricated because the majority of trading Activity from a platform is like saying that traditional financial products are manipulated because their volume comes mainly from trustees. “This ‘research’ is based on a basic misunderstanding of how financial products work.” Even Blockson’s CSO Samson Mow can not be long asked for a statement: The requirement of the paper is “ridiculous” and the latest update “also laugh. “If the researchers believed that a single whale could manipulate the prices of bitcoins and other assets,” they’ll probably also think that Santa Claus is bringing the gifts to every single child in the world with his flying reindeer sled. “What Samson conceals, is that Bitfinex (and thus Tether) has invested in his company Blockstream and he is not completely independent.
However, as long as the paper is not published, it is idle to speculate on how valid the results are. The fact that it is still so heavily debated in advance, shows that the media are still waiting for the death of Bitcoin and Co, while the Bitcoin scene the tether affair with thinning skin watching.