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Author Topic: [2018-06-15] BLOOMBERG - Cryptocurrency Manipulation Study Is Underwhelming  (Read 29 times)
odolvlobo
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June 15, 2018, 09:21:03 PM
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Finally there is a journalist with critical thinking skills!

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University of Texas at Austin finance professor John Griffin and graduate student Amin Shams just posted a paper suggesting that cryptocurrency prices are manipulated.  The paper has received a great deal of attention in the media, but there is a disconnect between the paper and the press coverage in terms of quantification.
...

https://www.bloomberg.com/view/articles/2018-06-15/bitcoin-manipulation-study-is-less-than-it-seems

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June 15, 2018, 10:59:20 PM
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Thanks for sharing. I hadn't dug into the paper yet, and I generally approach these kinds of claims with skepticism. A couple more highlights from the article that I think are worth noting:

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The four basis-point increase in Bitcoin prices explains less than 1 percent of the variance. While it technically meets normal standards of statistical significance, given the guesswork the authors had to do to collect data and the complexity of the analysis, I consider it more likely to be noise than signal.

There's a big difference between "statistical significance" and actually meaningful claims like "Tether manipulation is responsible for the price reaching $20,000." It looks like Tether manipulation may have had a very, very small -- but technically noticeable -- effect.

From skimming the previous articles, it also seems like there's a tendency for naysayers to conflate "not random" with "manipulation" and I'm not sure there is basis for that. This ties in to correlation vs. causation. Sure, perhaps there are statistical irregularities, but have the researchers conclusively explained them? It sounds like their methods don't account for all possible variables involved:

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That is indeed strong evidence that the 87 hours following the hours with the largest Bitcoin and tether flows are not random. But we already knew they weren't random, they were times of high transaction volume, which would be expected to have more volatile prices than average, and trading volume was much higher on the upswings than the downswings.

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