Tether "accounts for more transaction volume than USA dollars" for bitcoin, the researchers say. Twitter accounts and websites such as Tether Printer which tracks the movement of new tokens issued by Tether's central organization show that millions of dollars' worth of USDT were printed through the 2017 and early 2018 market seasons - correlated with the rise of Bitcoin and other cryptocurrencies.
John Griffin and Amin Shams, in their research article, 'Is Bitcoin really Un-Tethered?' aim to investigate the relation between Bitcoin, other cryptocurrencies, and Tether, a cryptocurrency purportedly clinched to the US dollar that carries more transaction volume than dollars.
Again, in plain language: in periods right after the bitcoin price falls and Tether mints a bunch more USDT, that's when it's clear that somebody (who could it be?!) is artificially pushing the bitcoin price back up.
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The paper by John Griffin, a finance professor at the University of Texas who has researched fraud in other markets, and graduate student Amin Shams, found that the virtual coin Tether was likely used to prop up Bitcoin prices late previous year. Price manipulation and collusion may be to blame. Other digital currencies like Ethereum and Litecoin soared at around the same time by as much as 64 percent. Tether is the 11th largest cryptocurrency and is pegged to the USA dollar.
Bitfinex, a cryptocurrency exchange, distributed Tether and supplied it to other exchanges, mainly Poloniex and Bittrex, the researchers said. "Due to the semi-transparent nature of the blockchain, we are able to use extensive algorithms to lump nodes of investors and match transactions on the Tether Blockchain to those on the Bitcoin Blockchain". Their paper seems to confirm what many have believed for months, if not years, that cryptocurrency markets are susceptible to manipulation. Although their findings don't definitively prove collusion or price manipulation, the Tether-Bitcoin buys had obvious benefits. "Tether issuances can not be used to prop up the price of bitcoin or any other coin/token on Bitfinex", he said.
Bitcoin reached its peak price of nearly $20,000 in December but is now trading at around $6,300 according to the Coin Market Cap.
In December, the CFTC sent subpoenas to Tether and Bitfinex, a popular cryptocurrency exchange that is affiliated with, and shares executives with, Tether. "These findings suggest that external capital market surveillance and monitoring may be necessary to obtain a market that is truly free", they conclude.