Tether to Force BTC Price Jump, Research Says

New research is called 'Is Bitcoin Really Un-Tethered?' and is conducted by John Griffin, professor of finance at the University of Texas, and Amin Shams
14 June 2018   1093

The authors of the new study argue that the bitcoin rate was manipulated by the issuer of Tether. 

Using algorithms to analyze the blockchain data, we find that purchases with Tether are timed following market downturns and result in sizable increases in Bitcoin prices. Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in Bitcoin and 64% of other top cryptocurrencies.

'Is Bitcoin Really Un-Tethered?' Research

Researchers John Griffin, who is a professor of finance at the University of Texas, and Amin Shams analyzed data from the CoinAPI, Coinmarketcap.com, Blockchain.info, Omniexplorer.info and CoinDesk portals, using algorithmic analysis techniques to establish the relationship between transaction flows and cryptocurrency prices.

From March 1, 2017 to March 31, 2018, the actual Bitcoin price rises from around $1190 to $7000 for a 488% return. In contrast, the price series without the 87 Tether-related hours ends at around $4100, a 245% rise. Hence, the hours with the strongest lagged Tether flow, which account for less than 1% of the time-series, seem associated with 50% of the Bitcoin buy-and-hold return over the period.

'Is Bitcoin Really Un-Tethered?' Research

The study also says that Tether's influence is not limited to the bitcoin market alone.

The percentage of the buy-and-hold return that are attributable to the Tether-related hours range from 42% for Dash to 82% for Zcash. Ethereum, for example, experienced near 2400% return during this period, while it would alternatively experience around 900% return if the Tether-related hours were excluded. Across the six other crypto currencies, returns are 64% smaller on average when removing the 87 Tether-related flow hours.

'Is Bitcoin Really Un-Tethered?' Research

Analysts do not pretend to the accuracy of calculations, but argue that in the periods after the release of Tether or moving them beyond the Bitfinex exchange, certain regularities are traced. 

The suspicions that Bitfinex and Tether can influence the price of bitcoin have long existed in the community. In January, it became known that the Commodity Futures Trading Commission (CFTC) was conducting its own investigation in a case involving two companies. After the appearance of this news, Tether hadn't print its tokens for several months, but in March it issued 300 million USDT, and in May - 250 million more. Recently, the CFTC refused to answer questions about the progress of the investigation.

Tether has long promised to provide audit of USDT, however it has not done so yet, forcing market participants to guess how much the growth of the bitcoin price was provided by printing of unsecured tokens if such an activity generally took place.

Tether to Transfer 15M USDT to Liquid Network

It should be noted Liquid allows you to hide values ​​in the public registry using the "confidential transaction" protocol
09 January 2020   188

On January 7, Tether, the stablecoin issuer, transferred 15 million USDT from its reserves on the Ethereum blockchain to Blockstream's Liquid network, which is a federated bitcoin sidechain. The technical feasibility of such a swap was first announced in July 2019.

An important difference between Liquid and other blockchains is the support of assets that allow you to hide values ​​in the public registry using the "confidential transaction" protocol. By transferring Tether between exchange accounts through Liquid, traders will be able to avoid disclosing information about their intentions to other market participants.

Movements of tether can be tracked in general but also particularly to and from exchanges, which is valuable information. People absolutely trade based on this information. Moving from a blockchain that has transparent transactions and onto Liquid is somewhat of a no-brainer in the context of trading.



Pseudonymous Blockstream community manager

 Blockstream CSO Samson Mow noted that Liquid-based Tether could be the first example of a semi-private stablecoin.

Services like Whale Alert, that track movements of assets, would not work for confidential assets in Liquid. With Confidential Transactions you can’t see the amounts being sent from one party to another. That means that USDT issued in the Liquid Network provides better privacy than USDT on other chains.


Samson Mow

Blockstream CSO

At the same time, the Tether emission in the Blockstream system remains public, which can help dispel skeptics' doubts.

According to Tether Technical Director Paolo Ardoino, customer interest in confidential transactions led the company to decide to transfer $ 15 million from the Ethereum network to Liquid.