Bitcoin’s 2017 Boom Largely Fueled by a Single Trader
Bitcoin’s 2017 bull run, which saw the world’s leading digital asset top out at nearly $20,000 USD, was mostly driven by a lone anonymous trader, according to analysis gathered by two finance professors from the University of Texas and Ohio State University.
Professors John Griffin and Amin Shams analyzed over 200 gigabits of data relating to the transaction history between Bitcoin and Tether, another highly controversial stablecoin, and found that the surge in value in late 2017 was attributable to one large player, or a whale in the crypto world, but the identity of the investor remains unknown.
“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.” Their hypothesis is based on the theory that Tether coins, which should be backed 1:1 with USD, are printed with no backing and used to purchase Bitcoin.
“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 wrote in a paper to be published in a forthcoming Journal of Finance.
The theory that Tether is being used to manipulate the value of Bitcoin and other altcoins is not a new revelation. Last month the coin, and its parent company Bitfinex, were accused of creating “the largest bubble in human history” in a class-action suit. The case alleges that the two companies, and a number of affiliated entities, manipulated the crypto market out of up to $1.4 trillion USD by printing unbacked coins.
Meanwhile, Bitcoin has ended a three-month bear run after gaining over 10% in October. The double-digit gains mean the digital coin has outperformed gold prices for the first time since June, which is considered a useful barometer of its performance given their reputations as safe-haven assets. BTC is currently valued at $9,448 USD.
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