íàçâàíèå

Tether Has No Real Impact on Bitcoin price: University Researcher

Tether Has No Real Impact on Bitcoin price: University Researcher

Contrary to the somewhat-popular idea that tether (USDT) issuance is used to manipulate crypto markets by boosting the price of bitcoin, a new academic study by researcher Wang Chun Wei of the University of Queensland Business School shows that the most widely-used stablecoin in fact has a negligible effect.

Tether and the 2017 Bitcoin Price Rally

Titled “The Impact of Tether Grants on Bitcoin,” the report examines the tether-bitcoin price manipulation theory using a Value-at-Risk (VAR) model to establish conclusively that while there is a positive correlation between USDT grants and bitcoin’s trading volume, this does not lead to any significant bitcoin price movement.

In July, CCN reported that researchers from the University of Texas claimed that market manipulators used Tether’s USDT token to artificially inflate the bitcoin price during its prolonged 2017 bull run. In the 66-page report, Professors John Griffin and Amin Shams argued that tether has been repeatedly used to provide price support for bitcoin during market downturns.

Using the VAR model however, the new study debunks these claims, stating that no empirical evidence could be found to support claims of a positive correlation between USDT grants and the 2017 bitcoin price rally.

An excerpt from the report reads:

Tether Issuance Correlates to Increased Trading Volume

BTC/USD | Bitfinex

The report does, however, find evidence of a positive correlation between issuance of USDT tokens and increased cryptocurrency trading the following day. The study’s estimates show that in the aftermath of a tether grant, both bitcoin and tether experience increased trading volumes. The researchers are quick to point out that trading volume spikes do not directly lead to bitcoin price increases; moreover, the effect on trading volumes is temporary, and volume generally returns to normal within five days.

This would seem to indicate that, after Tether issues new tokens, investors could be purchasing bitcoin and other coins with USDT, but in terms of net effect, the size of the grants is not large enough to create any kind of significant price manipulation effect in the bitcoin market.

The study also found that tether grants are autocorrelated, indicating that Tether deliberately breaks large grants into smaller blocks for issuance over several days, so as to minimise price impact on crypto exchanges. Even more significantly, the study found evidence to suggest that USDT trading volumes increase following downward bitcoin price movements, which could be a result of investors keeping their holdings in stablecoins during bearish periods.

The spike in USDT issuances around this period could thus be a result of Tether responding to increased demand by launching new grants rather than an attempt to shore up bitcoin’s support levels by purchasing it with newly-minted USDT.

Featured Image from Shutterstock. Charts from TradingView.


• Join CCN's crypto community for $9.99 per month, click here.
• Want exclusive analysis and crypto insights from Hacked.com? Click here.
• Open Positions at CCN: Full Time and Part Time Journalists Wanted.
22.09.2018 / 14:00 23
Ethereum Co-Founder Defends Tether Against Bitcoin Price Manipulation Claims Ethereum Co-Founder Defends Tether
One of the cryptocurrency community’s most respected voices is throwing his support behind tether (USDT), the controversial “stablecoin” that critics
‘Precursor of Price Going Up’: Tether Grants Another $250M in USDT Tokens ‘Precursor of Price Going Up’: Tether
Controversial stablecoin Tether (USDT) has issued $250 million dollars worth of tokens which Litecoin creator Charlie Lee sees as a bullish sign.
Report: Tether Does Have Enough Dollar Reserves to Back All USDT in Circulation Report: Tether Does Have Enough Dollar
A Washington-based law firm said today that the cryptocurrency Tether (USDT), which as its name suggests is pegged to the value of the U.S. dollar,
New Research Claims Bitcoin Price was Manipulated using Tether (USDT) New Research Claims Bitcoin Price was
New research out of the University of Texas alleges that the price of Bitcoin throughout its bull run in 2017 was being manipulated using Bitfinex’s
Bitcoin Price was Manipulated by Tether, Researchers Claim Bitcoin Price was Manipulated by
Market manipulators used Tether’s USDT token to artificially inflate the bitcoin price during 2017’s prolonged bull run. That’s according to
‘Bitcoin’s (BTC) Price Was Pushed Up Using Tether (USDT) Manipulation’, say Researchers ‘Bitcoin’s (BTC) Price Was Pushed Up
In a newly available research paper by faculty at University of Texas (Austin), the question as to whether Tether (USDT) has influenced the price of
Comments (0)
Add a comment
Comment on