Tether Manipulation Pushed Up Bitcoin's Price, Researchers Find

The U.S. dollar-pegged tether has been used to support bitcoin’s price during market downturns, a new study published by University of Texas at Austin professors.

John Griffin and Amin Shams, of the University of Texas at Austin’s Department of Finance, published a study Wednesday linking the stablecoin with bitcoin’s prices during the 2017 price increases. The published study states that the researchers used “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.

This produced a clear link between the printing of new tether tokens and bitcoin’s price increases following bear runs, the study claims, stating:

“By mapping the blockchains of bitcoin and tether, we are able to establish that entities associated with the Bitfinex exchange use tether to purchase bitcoin when prices are falling. Such price supporting activities are successful, as Bitcoin prices rise following the periods of intervention. These effects are present only after negative returns and periods following the printing of tether.”