Researchers behind an earlier study claiming that US Dollar Tether (USDT) was the cause of the 2017 Bitcoin bull market peak now claim that a single large holder drove the price upwards. However, an analyst at VanEck believes this to be nonsense.
Instead, Gabor Gurbacs claims that the rise was caused by “organic bitcoin and crypto demand”. Tether, the company behind USDT has also called the research “foundationally flawed” and that it was likely published to support a “parasitic lawsuit”.
Did Bitcoin Nearly Hit $20,000 Organically, or Was it Helped up by a Lone Whale?
According to a report in Bloomberg, University of Texas Professor John Griffin and Amin Shams from Ohio State University have updated their 2018 paper relating to the massive Bitcoin price rise in 2017. The two academics now claim that the manipulation was the work of a single large holder of Bitcoin, popularly known as a “whale”.
“Our results suggest instead of thousands of investors moving the price of Bitcoin, it’s just one large one.”
The researchers still claim that USDT was used in the manipulation. They observed that Bitcoin purchases increased on the Bitfinex exchange platform whenever the price fell by certain amounts. They have not speculated as to the identity of the whale they believe to be behind the price manipulation. The paper reads:
“This pattern is only present in periods following printing of Tether, driven by a single large account holder, and not observed by other exchanges.”
They added that such patterns are unlikely to be the result of chance and that one massive trader had “an extremely large price impact on Bitcoin”.
However, Gabor Gurbacs, an analyst at fund management firm VanEck, refutes the study. He alleges that those behind it do not understand the Bitcoin market structure. Instead, he believes that no such manipulation took place and the epic price run that took Bitcoin just short of $20,000 was “organic”.
Similarly, General Counsel at Tether, Stuart Hoegner, says that the study has no merit. He claims that the updated study still lacks “academic rigor”. Agreeing with Gurbacs, he told the publication that the large increase in Bitcoin prices were the result of growing interest in Bitcoin, which in turn drove demand for USDT. He also added:
“This is a transparent attempt to use the semblance of academia for a mercenary money grab.”
Tether and Bitfinex have been no stranger to such controversy over the years. In an ongoing case, New York Attorney General Letitia James alleges that the companies’ executives attempted to cover up $850 million of missing funds. However, Bitfinex say that the case is full of errors. Hoegner believes that the latest study has been produced to support the case against the firms.