A few days ago, Tether crypto once again boarded the layout of major foreign media, because there are researches that Tether manipulated Bitcoin prices, and played a pivotal role in last year's super-bull market. This stable currency, anchored with the US dollar, has been criticized on more than one occasion for alleged market manipulation. However, this research provides the most convincing evidence so far that the historical high of Bitcoin may have been inextricably linked with Tether last year.
This research was written as a thesis entitled “Is Bitcoin really not affected by Tether?” It using algorithmic investigations and blockchain analysis to confirm the timing of tether's distribution in cryptocurrency ecosystems may be a tool for artificially pushing up bitcoin prices. For a long time, people in the cryptocurrency community have always claimed that tether-led market manipulation is very rampant.
The analysis shows the supporting mode of Bitcoin price. First, Tether was founded by its parent company, Tether Ltd. Almost all of the new tether tokens were transferred to the Bitfinex exchange. Shortly after tether was released, when Bitcoin prices fell, tether on Bitfinex and other exchange were used to "buy bitcoins in a coordinated manner." If there is fraud or manipulation in the market, it may leave traces in the data, and the trajectory in the data is highly consistent with the assumption of manipulation.
The paper describes several patterns discovered within a year. First, financial flows are asymmetric. When Bitcoin prices fell, there was an increasing trend to use Tether to buy bitcoins, which helped reverse the downward trend in Bitcoin prices. However, when bitcoin prices rose, we did not see the opposite phenomenon. This means that Tether may be used to protect the price of bitcoin during the market downturn.
This paper investigates whether Tether affects the price of Bitcoin and other cryptocurrencies during the bull market period. After using the algorithm to analyze the blockchain data, we found that in the market downturn, there will always be the phenomenon of using tether to buy Bitcoin at regular time, leading to a substantial increase in the price of Bitcoin.
The large amount of transactions to buy bitcoins with tether accounted for only 1% of the total research time, but it was directly related to the 50% increase in bitcoin prices during the period, and it was related to the rise of 64% of other top cryptocurrencies,such as xrp, ether, zcash and so on. The flow of funds is concentrated in the down period of the price, resulting in an asymmetric automatic correlation of Bitcoin. This model cannot be explained by investor demand, but it is highly consistent with supply-based assumptions (tether is used to provide price support and manipulate cryptocurrency prices).
Recently, tether market cap rising to No. 11. it has surpassed Dash and Monero. However, if tether has been suspected of manipulating Bitcoin prices, it will face more rigorous audits. And if it is proved that tether indeed manipulated the bitcoin price, the cryptocurrency market will face a fierce storm.