STUDY STATES THAT COURSES IN BITCOIN HAVE BEEN HANDLING
An American university study shows that with each significant fall of Bitcoin, massive redemptions were observed to halt the decline. The Bitfinex platform is particularly targeted.
It's a sea snake that comes back regularly in the news of Bitcoin, but this time the accusations are very well documented. John Griffin, a professor of finance at the University of Texas, released a document Wednesday in which he argues that at least half of the rise in the price of Bitcoin was artificially inflated between March 2017 and March 2018. As a reminder, its value increased from 1,190 to 7,000 dollars over this period (+ 488%). The academic, author of important publications since the late 1980s (including several on financial market fraud), identifies the Bitfinex trading platform as a source of manipulation. This is Bitcoin's first global stock exchange.
His study focused on the sequences in which the price of Bitcoin declined: on many occasions, he observed massive redemptions made in Tether, a cryptocurrency developed and controlled by Bitfinex (currently 12th sector capitalization). These movements have been observed at similar times on Bitfinex and on other platforms that accept Tether.
The researcher provides no evidence that Bitfinex has deliberately favored manipulation, but the flows concerned are almost all linked to addresses belonging to the exchange platform. He relied on the analysis of thousands of transactions recorded on the blockchain. This one is public and everybody can check the cryptocurrency flows. There are no names, but we can trace the cryptographic addresses. As if they corresponded to bank account numbers.
John Griffin points out that this "boost" has not benefited Bitcoin, since other cryptocurrencies, Ethereum and Zcash in mind, have also experienced artificial increases over the same period. The study is deemed credible by other experts, including Philip Gradwell, Chief Economist of Chainalysis, a company known for blockchain analysis. Without the effect of the Tether, the value of Bitcoin should have been around $ 4,100 at the end of March, which would be an increase of "only" 245% over one year. That of Ethereum should have been 900% instead of 2,400%.
In conclusion of his study, John Griffin writes: "The semi-transparent nature of the blockchain is a unique opportunity to examine the mechanics behind the growth of an asset during a period of intense speculation. (...) These results suggest that it may be necessary to improve surveillance to achieve a truly free market. More generally, our research shows that fraud is not just a consequence of rising prices and can substantially contribute to price distortion and misallocation of capital. "
