Tether Was Not Used To Manipulate Bitcoin’s Price, Study Concludes
A research report published by Wang Chun Wei, lecturer in finance at University of Queensland Business School, Ph.D., argues that there is no evidence to prove that Tether (USDT) was used to manipulate the price of Bitcoin (BTC) during 2017.
The research report titled “The Impact of Tether Grants on Bitcoin” was penned in May 2018 and employed a VAR model in which the value of Bitcoin (BTC) could be equated with the availability of USDT in the crypto market. In this manner, Wang Chun Wei strived to find out if there was a demonstrable connection between both the price of the BTC and the release of USDT.
Converse to what crypto skeptics expected, the research did not discover a straight connection between the two; however, it indicated that the issuance of USDT drew a parallel with a rise in the trading volume of both cryptocurrencies.
“There has been significant skepticism in the cryptocurrency community over the world’s biggest stable coin, Tether. In December 2017, the US Commodity Futures Trading Commission issued a subpoena to Tether Limited, and in January 2018, an anonymous report appeared claiming the cryptocurrency company was printing coins to artificially raise the price of Bitcoin. Our paper does not examine whether the newly issued Tether coins are indeed backed by US dollars or not, but by utilizing an unrestricted VAR, we examine the impact of these cryptocurrency issuances on subsequent cryptocurrency price. In conclusion, we do not find any evidence suggesting that Tether issuances cause subsequent increases in Bitcoin returns. However, we do find that Tether issuances are highly autocorrelated and cause subsequent increases in Bitcoin (and Tether) trading volume over the short term.”
The outcome of this study contravene with a study performed by John Griffin of the University of Texas , who decided that there was an unnatural rise in Bitcoin value caused by unwarranted release of USDT to avoid any considerable bearish correction. The distribution of this kind of reports is of noteworthy significance for regulators because they give unbiased proof of facts that would be hard to establish through other approaches.
It is essential to take notice that, as a consequence of a sequence of comparable publications, the SEC earlier examined a crypto exchange and the firm accountable for issuing USDT in the lookout for an answer to this situation. Notably, a report by Bank of America has concluded that Bitcoin transactions are 6000x cheaper than traditions methods of value transfers.
Presently, there are only stable cryptos which are pegged to the US dollar. However, the situation would soon change with the arrival of Aus Coin, which is pegged to the Australian dollar. The cryptocurrency is built by Bit Trade in partnership with Emparta.
The outcome of this study could assist in keeping the markets calm as there is research report now to prove that Bitcoin’s rally was not rigged by mighty investors.