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   196

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.

Crypto Exchange White Label Service launched by OKEx

OKEx, one of the biggest exchanges in the world, has declared the run of a crypto exchange creation programme ‘Digital Asset Exchange Open Partnership Program’
20 June 2018   72

The announcement claims that the programme is intended to “nurture a new generation of digital asset exchanges”. To establish a new crypto exchange, interested parties have to provide OKEx with a domain name, logo, and specialties of the management team. They are assured to possess “solid industry experience, quest for service excellence, and strong industry influence.”

Applicants should also deposit 500,000 OKB tokens into their accounts. This equals around $2.5 million at the present rate, according to coincodex.com. OKB is a utility token that were first sold in March of this year in packages of up to 100, each costing $100. They can be applied to settle transaction fees on the exchange and traded for Bitcoin, Ethereum and Tether.

The applicants will get access to OKEx’s fitting system (which links up buy and sell orders), cold and hot wallets (offline and online cryptocurrency storage), clearing system (which handles money transfer), client support system, and know-your-customer and anti-laundering systems. They will also get support from the OKEx technical team.

100 places are suggested by the programme in its first phase. It is anticipated to start in July. The announcement also points out the setup that the new exchanges must have. They will develop their own native tokens, and distribute them as follows:

  • 25 percent to themselves;
  • 24 percent to OKB holders;
  • and 51 percent to be mined.

OKEx explains the mechanisms by which the tokens will be mined/released. The term white label was firstly invented in the music industry - a white label vinyl record was a release so new that it had not yet been labelled, a much sought-after thing. Presently it cites to a service or product manufactured by one company and sold to another for re-sale under a different brand name.