We have heard this before, but now it seems it may have a bit more meat to it...

Basically ever since Bitcoin hit $20k in late 2017, rumors have swirled with just how legitimate that rally really was.

There was a strong correlation with tethers being issued and the price of bitcoin going up.

There wasn't a lot of meat to those rumors initially, mostly just a lot of circumstantial evidence.

The fact that there have been snapshots released of bank account figures backing the amount of tethers in circulation have put some of those fears/rumors to rest, but not all of them.

Today, we got a new report claiming much of that rally in 2017 was caused by a single manipulator

That's right, a report on CNBC this morning said that much of the 2017 rally was conducted by a single whale.

How did they do it?

According to the report it was a large player using the Bitfinex exchange and you guessed it, tethers.

Very similar to what was suggested before.

From the report:

“We find that the identified patterns are not present on other flows, and almost the entire price impact can be attributed to this one large player. We map this data across both blockchains and find that the one player or entity (labeled as 1LSg throughout the paper) is behind the majority of the patterns we document.”

(Source: https://www.cnbc.com/2019/11/04/study-single-anonymous-market-manipulator-pushed-bitcoin-to-20000.html?__source=iosappshare%7Ccom.apple.UIKit.activity.PostToTwitter)

While it is not entirely clear exactly how they came up with this conclusion from the release, they do seem to be pretty convinced about the results.

Tether and Bitfinex are currently being investigated by both the Department Of Justice and the New York Attorney General.

My thoughts:

I think this is very likely to be true.

While they may never be able to fully prove it, I remember watching the price increases and thinking to myself that it wasn't natural trading as I remember prices flying up any time there was any kind of a dip.

Almost like someone was preventing prices from rolling over.

What it ultimately means for tether and Bitfinex I have no idea at this point. The fact that they are located outside the US, I am not sure how that impacts US regulators/regulations etc.

Ultimately, I think even if Bitfinex were to be shut down and/or tethers removed from exchanges, bitcoin will continue to march on, mostly unaffected in the long run.

Which means, even if there was some sort of massive manipulation in the past, I think bitcoin will likely still survive and continue to chug along going forward.

Stay informed my friends.

Image Source:

https://www.bloomberg.com/news/articles/2019-11-04/lone-bitcoin-whale-likely-fueled-2017-price-surge-study-says

-Doc