Bitcoin whale may have manipulated coin’s price to spur 2017 bull run

  • 04 November 2019, Monday, 07:00

Bitcoin’s rise as a form of digital currency was solidified by the cryptocurrency’s massive hike in 2017. The bull run of 2017 was unlike any other, as the king coin’s price pumped by over $16,000 over a span of 30 days.

Although the surge was extremely significant, a recent report suggests that BTC’s monumental rise may have been due to a single whale’s movement on Bitfinex.

According to John Griffin, Professor at the Univerisity of Texas, along with Amin Shams, Assistant Professor at Ohio State University, one single whale’s movement on Bitfinex led to the exponential hike in Bitcoin’s price. This was their finding in a paper published in 2018, a paper that has since been updated.

John Griffin told Bloomberg,

“Our results suggest instead of thousands of investors moving the price of Bitcoin, it’s just one large one. Years from now, people will be surprised to learn investors handed over billions to people they didn’t know and who faced little oversight.”

In the paper, Griffin and Sham’s hypothesis read that BTC was manipulated to rise based on the theory that Tether was used to buy Bitcoin in order to pump its valuation, Tether that was not sufficiently backed by the US Dollar. The authors analyzed Bitcoin transactions from March 1, 2017, to March 31, 2018, and concluded that BTC bought on Bitfinex increased whenever the price of Bitcoin fell by significant measures. While the professors did not reveal the identity of the whale, they said,

“Simulations show that these patterns are highly unlikely to be due to chance. This one large player or entity either exhibited clairvoyant market timing or exerted an extremely large price impact on Bitcoin that is not observed in aggregate flows from other smaller traders.”

However, Stuart Hoegner, General Counsel of Bitfinex, rejected the allegations and claimed that the paper was “foundationally flawed,” adding that it lacked a sufficient data set. Accusing the authors’ paper as one “lacking academic rigor,” Hoegner stated that ardent stakeholders in the ecosystem understood the rise of the digital currency, claiming that it was the sole reason for the increased market demands of Tether.