Posted on 11/04/2019 1:06:20 PM PST by NRx
A forensic study on bitcoin’s 2017 boom has found that nearly the entire rise of the digital currency at the time is attributable to “one large player,” although the market manipulator remains unidentified.
Finance professors John Griffin and Amin Shams – instructors at University of Texas and the Ohio State University, respectively – analyzed over 200 gigabytes of data for the transaction history between bitcoin and tether, another digital currency. Tether is an asset known as a “stablecoin,” which has its trading value connected to the dollar.
The professors’ study found that tethers being traded for bitcoins revealed a pattern.
“We find that the identified patterns are not present on other flows, and almost the entire price impact can be attributed to this one large player,” Griffin and Shams wrote. “We map this data across both blockchains and find that the one player or entity (labeled as 1LSg throughout the paper) is behind the majority of the patterns we document...”
...The manipulation occurred as bitcoin rose to an all-time high of nearly $20,000 in late 2017, the study found. Bitcoin traded at about $9,300 on Monday.
“One of the SEC’s top worries is that crypto is subject to manipulation. This study appears to lend credibility to that argument,” Cowen analyst Jaret Seiberg said in a note on Monday.
The study comes after an analysis published in March found that 95% bitcoin spot trading is faked. The survey, created by cryptocurrency asset manager Bitwise for the SEC, found that only $273 million of about $6 billion in average daily bitcoin volume was legitimate.
(Excerpt) Read more at cnbc.com ...
Blockchain seems like very interesting technology.
But I don’t like it as a currency tool.
Who cares? I got in at 0.03 cents.
LOL
Where were the Hunt Brothers?
It was clear from other analysis at the time that the Tether exchange was creating fake Tethers that were not backed by actual dollars. This, coupled with their lack of any oversight of where their exchange customers got their cash to buy Tethers apparently allowed a large illegal player to buy Tethers with dirty money, buy Bitcoin with Tethers, and then sell the Bitcoin for clean laundered dollars.
What has changed since then that would prevent this kind of blatant criminal manipulation from recurring? Anonymity from trusted and regulated third party clearing of transactions is not a practical or safe technology.
Doesn’t this just make you want to put your entire financial life, future and well being behind a Facebook backed currency?
There was no way that Bitcoin was ever legitimately worth $20,000. Unless it is so universally used in black market dealings that I can’t wrap my head around the scope of its usage.
From my understanding it takes 10 minutes to a day to settle a transaction. That isn’t going to fly in the face of a Mexican standoff of here’s the product/here’s the money with guns drawn. But, maybe that just happens in the movies.
As far as blockchain cryptos there are faster kinds out there with more potential due to Bitcoin having a finite amount of “coins”. I once thought that the floor of a crypto would be the value of the amount of electricity needed to generate a coin. I think even that is too high.
And the xxxxx (dollar, gold, orange juice concentrate, pork bellies etc.) are not subject to manipulation?
“ From my understanding it takes 10 minutes to a day to settle a transaction.
...
My only experience with using bitcoin involved paying a bill I owed in an Asian country.
I thought I’d have to wire money from my bank, which is not cheap, tKes time, and they ask intrusive questions.
Then I noticed they accept payment by bitcoin.
I clicked the button, it brought up a barcode, I opened up my bitcoin wallet and it scanned it with my camera.
I clicked OK.
Received an email 3 minutes later that I was paid in full.
Pretty slick.
The normal financial markets operate under close government regulation and price manipulation, especially large scale, is extremely difficult and easily detected. For one thing there is no anonymity there. By contrast the crypto exchanges are deliberately designed for privacy and anonymity and they are largely unregulated. This is why they are so popular with organized crime and the ultra-wealthy trying to hide money. They hugely facilitate money laundering and tax evasion.
That is why I first got into bitcoin. Had some left over and basically forgot about it. Bought in around $200 and went to Disney World the next year of the run up to $20,000.
Nice gain.
I don’t worry about it.
Just put it away to look at in the future.
I still have a little bitcoin, along with 5 others That I have let sit for the past two years.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.