Thursday, June 14, 2018

Bitcoin's move to $20,000 per coin last year may have been a pump and dump after all following investigation into cryptocurrency manipulation

Bitcoin and other cryptocurrencies have proven themselves to be legitimate forms of financial securities that do serve several purposes in the global financial system.  But according to a new investigation conducted by a University of Texas Finance Professor, Bitcoin's parabolic move last year appears to have been done primarily on the back of pump and dump manipulation.

The record growth in bitcoin last year was actually a coordinated market manipulation, according to recent research by University of Texas Finance Professor John Griffin. 
Griffin, who has 10 years of experience in detecting financial fraud, examined millions of transactions on cryptocurrency exchange Bitfinex. In his paper, Griffin says that the 
US dollar-pegged cryptocurrency tether was used to buy bitcoin at the times that the latter was falling, which helped “stabilize and manipulate” the cryptocurrency's price. 
“Fraud and manipulation often leave footprints in the data and it's nice to have the blockchain to track things,” Griffin told CNBC. Whenever bitcoin fell, tether was used to buy it to prop up the price of the leading crypto. 
“It was creating price support for bitcoin and, over the period that we examined, had huge price effects,” Griffin said. “Our research would indicate that there are sophisticated people harnessing investor interest for their benefit.” – Russia Today
While not yet accepted widespread as a commercial currency, Bitcoin, Ethereum, and other cryptos function extraordinarily well as a medium of exchange for currency swaps.  However the majority of people who own cryptos do so as a speculative investment, which is in large part what allowed manipulators to boost the volumes of the asset not dissimilar to when investors jumped into tech stocks during the Dot Com bubble. 

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