Bitcoin Prices Are Falling Again. The Cause?

[Hydrogen]

Bitcoin fell 2% early on Wednesday, dropping as low as $6,385. Other than one brief period in early February, when the cryptocurrency dipped below $6,000, today marks the lowest point for Bitcoin in 2018.

The latest Bitcoin crash appears to be a reaction to the release of a new study by University of Texas-Austin researchers indicating that Bitcoin prices were manipulated last year—when Bitcoin soared from $800 to nearly $20,000.

The New York Times report on the study explained that a “concentrated campaign of price manipulation may have accounted for at least half of the increase in the price of Bitcoin and other big cryptocurrencies last year.”

The research, conducted by University of Texas finance professor John M. Griffin and graduate student Amin Shams, presents evidence that another cryptocurrency called Tether was used to purchase Bitcoin after market downturns, thereby propping up Bitcoin prices.

“Tether seems to be used both to stabilize and manipulate Bitcoin prices,” the researchers say in the study.

Tether was created by a crypto exchange called Bitfinex, whose executives strongly denies the claims. “Bitfinex nor Tether is, or has ever, engaged in any sort of market or price manipulation. Tether issuances cannot be used to prop up the price of Bitcoin or any other coin/token on Bitfinex,” Bitfinex CEO J.L. van der Velde said in a message sent to Business Insider.

The University of Texas researchers tracked millions of cryptocurrency transactions last year, and say that the “patterns cannot be explained by investor demand proxies” and instead seemed to arise through the strategic use of Tether.

What’s more, this scenario brings with it the possibility of huge profits for Tether creators, the study states: “If Bitcoin prices increase, then the founders can cash out the acquired Bitcoins into dollars, likely at a slower pace and on an opaque channel that has less price impact than their initial buying behavior. If the Tether issuers wish to legitimize Tether and avoid scrutiny, they can convert some of their cryptocurrencies to U.S. dollars and retrospectively provide dollar reserves for Tether.”

After skyrocketing in value in 2017, Bitcoin and other cryptocurrencies have collapsed through much of this year. Bitcoin fell 40% during the course of one week at the end of January, and cryptos like Ethereum, Ripple, and Litecoin dropped more than 25% in a single day. The cryptocurrency crash is still happening today. Litecoin, for one, decreased to a new low for 2018 on Wednesday, hitting $97—a dip of nearly 75% off the all-time high of $379 in December.

Much like the sharp increases of 2017, the steep declines for cryptocurrencies over the past few months are hard to fully explain. Most observers chalk them up to a combination of countries cracking down on crypto exchanges and investors either seeking to cash out their profits or eat their losses. Or more people could be accepting the premise of critics like billionaire investor Warren Buffett and Nobel-winning economist Robert Shiller, who basically say that Bitcoin is a scam, or at least a bubble that’s bound to pop.

Hackers and the possibility of price manipulation seem to also be concerns for crypto investors. After a South Korean crypto exchange said it was hacked last week, Bitcoin tumbled 10%. In addition to the new University of Texas report on Bitcoin price manipulation, U.S. investigators are looking into whether several cryptocurrency exchanges have been manipulating prices, the Wall Street Journal reported last week.

In the University of Texas study’s conclusion, researchers say, “Our findings provide substantial support for the view that price manipulation may be behind substantial distortive effects in cryptocurrencies.” And they say that more regulation is needed: “These findings suggest that external capital market surveillance and monitoring may be necessary to obtain a market that is truly free.”

http://time.com/money/5310924/bitcoin-price-manipulation-tether/

I haven't yet read the study which claims a link between tether and bitcoin. My initial impressions are its a BS claim. Tether lacks the market cap to significantly affect bitcoin's price. The amount of purchasing volume necessary to manipulate the price of bitcoin up near $20k is far in excess of bitfinex or tether's net worth. If the price of bitcoin was manipulated there are far better ways of explaining it. Crypto exchanges which lack trade commissions are probably a better explanation for market manipulation as it could allow traders to buy and sell to themselves on multiple accounts on an exchange without incurring significant losses.

The last line of this article seems to contradict itself:

In the University of Texas study’s conclusion, researchers say, “Our findings provide substantial support for the view that price manipulation may be behind substantial distortive effects in cryptocurrencies.” And they say that more regulation is needed: “These findings suggest that external capital market surveillance and monitoring may be necessary to obtain a market that is truly free.”

This is what comes to mind, reading the last part.



The idea of a crypto market being "enslaved" under surveillance and monitoring, in order to achieve "freedom" could be a form of "freedom is slavery" political posturing.

If the context is correct.

[davis196]

Tether might have insufficient funds to pump the bitcoin price to 19000 USD,but that doesn`t mean that such price manipulation can`t be done.Every price bubble is like a snowball.The price needs a small push in the market demand,in order to get the ball rolling and get new buyers.Then the FOMO beats the FUD and we have a speculation bubble.Is the BTC price manipulated by the crypto whales?Yes,off course it is,but who cares.
We are waiting for another manipulation that will bring the price to a new ATH.

[Hydrogen]

Tether might have insufficient funds to pump the bitcoin price to 19000 USD,but that doesn`t mean that such price manipulation can`t be done.Every price bubble is like a snowball.The price needs a small push in the market demand,in order to get the ball rolling and get new buyers.Then the FOMO beats the FUD and we have a speculation bubble.

What "investigators" should be looking at imo are exchanges where buying and selling carry no commission charge. This would make it possible for investors to buy and sell bitcoin to themselves on multiple accounts at elevated prices without incurring the losses they normally would incur from commission fees. If I remember right, a significant portion of bitcoin's price inflation in 2017 came from south korean exchanges which offered buying/selling with zero commission fees.

The bitfinex/tether "investigation" has been "underway" for near to 6 months. If they haven't found concrete evidence by now, I doubt any exists. That said, anyone interested in this should look at the daily buy/sell volume for an exchange like poloniex. According to this it is around $18 million dollars:

https://coinmarketcap.com/exchanges/poloniex/

How much disposable cash liquidity does bitfinex/tether have on hand to spend? Is it enough to prop up bitcoin's price for 12-18 months straight and make a sizable dent on exchanges which normally do upwards of $18 million in trading per day? The answer is likely: no.

If bitfinex/tether is guilty, there should be a money trail investigators can follow. They should be able to link accounts on exchanges back to bitfinex personnel and prove beyond a doubt the alleged market manipulation occurred. All they have is a "research paper" which appears to indicate they have zero evidence of collusion there.

Am I wrong? Someone tell me.  

[Stac]

Bitcoins prices are falling as there was a korean exchange got hacked which lead to the fall in the crypto currency market. The financial markets will not be stable for longer time, there will be a bubble and popping time and investors look for the markets to get down to invest in the crypto currency market as there is good potential for the crypto currencies to increase its price, and when the prices goes up the investors sell them to earn profits from the returns of the investment and will look to re- invest when the prices get down so on and so forth.

[randythered]

Normally when such a report comes out the truth is somewhere in the middle of the two sides and I suspect the same is true here. I agree with your thoughts about tether and bitfinex not having enough funds behind them to influence the market in such a significant way. That however doesn't mean they can't have manipulated it in some capacity. As davis196 said they only need to get the ball moving in a lot of cases. I think potential tether manipulation is just one part of a much larger explanation for the growth we saw in 2017.

[Kate Beckett]

The bitcoin rate fell again after the statement of the South Korean crypto exchange that it was subjected to a cyberattack. Technically, and especially fundamentally, there are reasons today for quotes to continue to decline. The current pause will be used by "bears" to consolidate efforts and pressure on the bitcoin rate to new minimum values.

[Saiful Islam777]

Bitcoin prices have started to fall. some days, the currency market will be unstable. Now, while investing in crypto currency market, they can achieve doubling profits with prices.

[clickerz]

The cause maybe with the Announcement pf investigations with insider trading on some big exchanges. Whales maybe  cashing out, and it causes price dump. In addition there is also a hacking incident on big exchanges, an asian whale who is moving his BTC to houbi and so forth. So much FUD maybe.

[dothebeats]

It's normal for people to point the blame on to something they know that took quite a hit in the past, and Tether is a likely target for the unknowing people wanting to summarize what really happened on the 2017 ATH run. I'd also believe that the Koreans were a large part of the said bull run due to their exchanges having 0 commission fees for every trade since, as OP put it, no amount of losses whatsoever would be incurred no matter how many times one person or group of people were to execute the same kind of trades to inflate the prices over and over again. Tether, on the other hand doesn't really have the financial capability to inflate the prices that much, nor even make a dent into bitcoin's run in 2017. This is just another try to get views without really looking into fundamentals and possibilities.

As for the price crashes of today, I don't think it's the lack of regulation that causes these hard hits on bitcoin but rather, the waning interest of the general public and lack of support from the bulls currently. Honestly, I don't see why the average people would buy bitcoin at this point of time, given that there's no incentive for them short-term and long-term, they might just lose money.

[ShadowBits]

Bitcoin fell 2% early on Wednesday, dropping as low as $6,385. Other than one brief period in early February, when the cryptocurrency dipped below $6,000, today marks the lowest point for Bitcoin in 2018.

The latest Bitcoin crash appears to be a reaction to the release of a new study by University of Texas-Austin researchers indicating that Bitcoin prices were manipulated last year—when Bitcoin soared from $800 to nearly $20,000.

The New York Times report on the study explained that a “concentrated campaign of price manipulation may have accounted for at least half of the increase in the price of Bitcoin and other big cryptocurrencies last year.”

The research, conducted by University of Texas finance professor John M. Griffin and graduate student Amin Shams, presents evidence that another cryptocurrency called Tether was used to purchase Bitcoin after market downturns, thereby propping up Bitcoin prices.

“Tether seems to be used both to stabilize and manipulate Bitcoin prices,” the researchers say in the study.

Tether was created by a crypto exchange called Bitfinex, whose executives strongly denies the claims. “Bitfinex nor Tether is, or has ever, engaged in any sort of market or price manipulation. Tether issuances cannot be used to prop up the price of Bitcoin or any other coin/token on Bitfinex,” Bitfinex CEO J.L. van der Velde said in a message sent to Business Insider.

The University of Texas researchers tracked millions of cryptocurrency transactions last year, and say that the “patterns cannot be explained by investor demand proxies” and instead seemed to arise through the strategic use of Tether.

What’s more, this scenario brings with it the possibility of huge profits for Tether creators, the study states: “If Bitcoin prices increase, then the founders can cash out the acquired Bitcoins into dollars, likely at a slower pace and on an opaque channel that has less price impact than their initial buying behavior. If the Tether issuers wish to legitimize Tether and avoid scrutiny, they can convert some of their cryptocurrencies to U.S. dollars and retrospectively provide dollar reserves for Tether.”

After skyrocketing in value in 2017, Bitcoin and other cryptocurrencies have collapsed through much of this year. Bitcoin fell 40% during the course of one week at the end of January, and cryptos like Ethereum, Ripple, and Litecoin dropped more than 25% in a single day. The cryptocurrency crash is still happening today. Litecoin, for one, decreased to a new low for 2018 on Wednesday, hitting $97—a dip of nearly 75% off the all-time high of $379 in December.

Much like the sharp increases of 2017, the steep declines for cryptocurrencies over the past few months are hard to fully explain. Most observers chalk them up to a combination of countries cracking down on crypto exchanges and investors either seeking to cash out their profits or eat their losses. Or more people could be accepting the premise of critics like billionaire investor Warren Buffett and Nobel-winning economist Robert Shiller, who basically say that Bitcoin is a scam, or at least a bubble that’s bound to pop.

Hackers and the possibility of price manipulation seem to also be concerns for crypto investors. After a South Korean crypto exchange said it was hacked last week, Bitcoin tumbled 10%. In addition to the new University of Texas report on Bitcoin price manipulation, U.S. investigators are looking into whether several cryptocurrency exchanges have been manipulating prices, the Wall Street Journal reported last week.

In the University of Texas study’s conclusion, researchers say, “Our findings provide substantial support for the view that price manipulation may be behind substantial distortive effects in cryptocurrencies.” And they say that more regulation is needed: “These findings suggest that external capital market surveillance and monitoring may be necessary to obtain a market that is truly free.”

http://time.com/money/5310924/bitcoin-price-manipulation-tether/

I haven't yet read the study which claims a link between tether and bitcoin. My initial impressions are its a BS claim. Tether lacks the market cap to significantly affect bitcoin's price. The amount of purchasing volume necessary to manipulate the price of bitcoin up near $20k is far in excess of bitfinex or tether's net worth. If the price of bitcoin was manipulated there are far better ways of explaining it. Crypto exchanges which lack trade commissions are probably a better explanation for market manipulation as it could allow traders to buy and sell to themselves on multiple accounts on an exchange without incurring significant losses.

The last line of this article seems to contradict itself:

In the University of Texas study’s conclusion, researchers say, “Our findings provide substantial support for the view that price manipulation may be behind substantial distortive effects in cryptocurrencies.” And they say that more regulation is needed: “These findings suggest that external capital market surveillance and monitoring may be necessary to obtain a market that is truly free.”

This is what comes to mind, reading the last part.



The idea of a crypto market being "enslaved" under surveillance and monitoring, in order to achieve "freedom" could be a form of "freedom is slavery" political posturing.

If the context is correct.

It is so obvious that people got scared again because of one exchange that has been hacked. Well, for my own understanding it is some people plan to bring down Bitcoin more.

[Ranly123]

Tether might have insufficient funds to pump the bitcoin price to 19000 USD,but that doesn`t mean that such price manipulation can`t be done.Every price bubble is like a snowball.The price needs a small push in the market demand,in order to get the ball rolling and get new buyers.Then the FOMO beats the FUD and we have a speculation bubble.Is the BTC price manipulated by the crypto whales?Yes,off course it is,but who cares.
We are waiting for another manipulation that will bring the price to a new ATH.

That's right. Who cares if the price is manipulated by those whales. As long as we ride the tide then there should be a possibility that we are going to reach another ATH for Bitcoin. Yet, only the strong hands can ride the tide and not those people who panic when seeing the market drop.

[Lorence.xD]

Tether might have insufficient funds to pump the bitcoin price to 19000 USD,but that doesn`t mean that such price manipulation can`t be done.Every price bubble is like a snowball.The price needs a small push in the market demand,in order to get the ball rolling and get new buyers.Then the FOMO beats the FUD and we have a speculation bubble.Is the BTC price manipulated by the crypto whales?Yes,off course it is,but who cares.
We are waiting for another manipulation that will bring the price to a new ATH.

That's right. Who cares if the price is manipulated by those whales. As long as we ride the tide then there should be a possibility that we are going to reach another ATH for Bitcoin. Yet, only the strong hands can ride the tide and not those people who panic when seeing the market drop.

Market is Volatile, it react to anything either good news or bad news posted on the treed, there are a lot of indicators that could affect the price value of Bitcoin, the behavior of investors on the Trading (Buying and Selling), fundamentals, oversold, HODL, FUD, and a lot more, but the good news is, Bitcoin remain on the top of all ALT coin and recovering, corrective rally on the market preview, and rebound to better price value.

[pey]

There are lots of causes of the fall in the market but for me it is just an repeat of history. Factors may change over time but the cycle does not change.

[audaciousbeing]

I haven't yet read the study which claims a link between tether and bitcoin. My initial impressions are its a BS claim. Tether lacks the market cap to significantly affect bitcoin's price. The amount of purchasing volume necessary to manipulate the price of bitcoin up near $20k is far in excess of bitfinex or tether's net worth. If the price of bitcoin was manipulated there are far better ways of explaining it. Crypto exchanges which lack trade commissions are probably a better explanation for market manipulation as it could allow traders to buy and sell to themselves on multiple accounts on an exchange without incurring significant losses.

The last line of this article seems to contradict itself:

In the University of Texas study’s conclusion, researchers say, “Our findings provide substantial support for the view that price manipulation may be behind substantial distortive effects in cryptocurrencies.” And they say that more regulation is needed: “These findings suggest that external capital market surveillance and monitoring may be necessary to obtain a market that is truly free.”

This is what comes to mind, reading the last part.



The idea of a crypto market being "enslaved" under surveillance and monitoring, in order to achieve "freedom" could be a form of "freedom is slavery" political posturing.

If the context is correct.

The research about Tether being used to manipulate the price of bitcoin is not something new as I have read several times on the forum on the possibility of that and with compelling argument difficult to ignore but there is still some gaps in such conclusions. If Tether is being used, I believe Tether itself is still in existence then why do we still have a downward trend in price. Another thought is that, while not ignoring the possibility of Tether in price manipulation, I think its wrong to totally ascribe the increase to that only factor because during that time, we have not had any issue concerning Facebook planning to ban crypto or Google or Twitter and these are powerful major platforms in which the message are spread to the mass populace. In addition to that, we also have not had the aggressive KYCs that we have now which has made a lot of people lose interest because their anonymity is no longer guaranteed. These and many other reasons are factors that played a great role in the all time high price period.

[Yatsan]

The cause maybe with the Announcement pf investigations with insider trading on some big exchanges. Whales maybe  cashing out, and it causes price dump. In addition there is also a hacking incident on big exchanges, an asian whale who is moving his BTC to houbi and so forth. So much FUD maybe.

Same news i have read yesterday, the whales or institutional investors are trying to pulling off and controlling the price of bitcoin just by cashing out so the price will vary as the effect.  As far as i know whales do have the 30% of the circulating supply of bitcoin and so does they handle a large portion of the bitcoin's price.

[gilangIDR]

The cause maybe with the Announcement pf investigations with insider trading on some big exchanges. Whales maybe  cashing out, and it causes price dump. In addition there is also a hacking incident on big exchanges, an asian whale who is moving his BTC to houbi and so forth. So much FUD maybe.

Same news i have read yesterday, the whales or institutional investors are trying to pulling off and controlling the price of bitcoin just by cashing out so the price will vary as the effect.  As far as i know whales do have the 30% of the circulating supply of bitcoin and so does they handle a large portion of the bitcoin's price.

They just make themselves a great profit, their attitudes have made us all suffer. They do price manipulation and then take part by buying coin at a cheap price and selling it when the price increases. They are free to do anything because they have huge assets.

[wantjokull]

There are lots of causes of the fall in the market but for me it is just an repeat of history. Factors may change over time but the cycle does not change.

Oh come on! What reasons and what history? Nothing is getting explained here at all. History doesn't repeat itself and as you said different factors explains the fate of bitcoin all the time.

“Tether seems to be used both to stabilize and manipulate Bitcoin prices,” the researchers say in the study.

This can be something and completely reasonable to disturb the bitcoin. Most of the time when crypto currencies are getting up and down then Tether is the first place where all the money goes. This takes out most of the market cap and drive it into the USDT.

But, its just guess and non conclusive proof of this!

[okala]

Now that the research conduct by the Texas university indicate that there is a manipulation in the market and that is why we see the high pump in price we witnessed last year I think we can still do the same now.  The campaign about were bitcoin should be in price can be copy from last year and we can create another FUD again for price pumpping.

[LuciferEveningStar]

Now that the research conduct by the Texas university indicate that there is a manipulation in the market and that is why we see the high pump in price we witnessed last year I think we can still do the same now.  The campaign about were bitcoin should be in price can be copy from last year and we can create another FUD again for price pumpping.

Yes you are right, fud is always manipulating the prices in the market so the best thing today is just wait for the prices to grow before selling, in this way we can assure that our coins will be safer to hold since market will go back to normal when bad news are done spreading and market will pump again.

[hsyncl]

I still can not understand why Bitcoin falls. The volume is starting to increase, suddenly it is cutting. It is followed by more and more people than last years. I'm really surprised why the rise does not happen.