Bitcoin’s outstanding run final yr might have been smoke and mirrors.
Tether, one other digital forex tied to the US greenback, was used to artificially inflate bitcoin costs, in accordance a examine launched Wednesday by the College of Texas.
John Griffin, a finance professor on the college, and graduate scholar Amin Shams analyzed blockchain purchases and found that main Tether buys had been timed to observe market downturns and helped stabilize bitcoin’s ground.
“These patterns can’t be defined by investor demand,” they mentioned within the examine.
Griffin and Shams have additionally not too long ago discovered that the VIX, Wall Avenue’s volatility index, was being manipulated.
A lawsuit filed in March cited their analysis to assert merchants manipulated the worth of VIX choices and futures by making bets on the S&P 500 earlier than VIX settlement auctions.
The value of bitcoin dropped 1% on Wednesday to round $6,485, based on CoinDesk. Bitcoin’s droop drove down different cryptocurrencies, together with ripple, litecoin, and ethereum.
Bitcoin continued reeling days after an enormous hack in South Korea. On Monday, South Korea’s Coinrail mentioned that it had been hacked and about 30% of its virtual currencies were stolen. South Korea is among the largest markets for crypto buying and selling on the earth.
Over the previous month, bitcoin has misplaced 25% of its worth.
Retail consumers flooded the market late final yr, lifting bitcoin to above $19,000 in December. Nevertheless it has fallen in current months attributable to fears of stricter rules and an absence of institutional traders coming in, mentioned Jason Yanowitz, co-founder of blockchain advisory agency BlockWorks Group.
—CNNMoney’s Daniel Shane contributed to this story.