LongHash: 2017 Bitcoin (BTC) Bull Run not Caused by Tether (USDT) Market Manipulation


The academic paper saying the Bitcoin’s (BTC) 2017 bull run was the result of a single whale has been debunked by researchers who specialize in the blockchain.

The paper claims that a whale on crypto exchange Bitfinex has spiked the price for Bitcoin when it went under the specific levels. It was written by University of Texas’ John Griffin and Amin Shams from the Ohio State University.

What it tries to explain is that Tether tokens don’t have the dollars to back them in the market. During the single whale, Tether was used to buy Bitcoin, thus the explanation for the price of the stablecoin going up so much.

LongHash Study Doesn’t Agree

A study conducted by LongHash is saying Shams and Griffin’s paper is only bringing unsupported evidence about how Tether isn’t backed by cash and that it’s only meant to show how cash management in Tether auditing actually works. This is what this study reads:

“The authors hypothesize that since Tether is due to be audited each month, it needs to sell some of its Bitcoin holdings at the end of each month if large amounts of Tether have been issued that month, which then causes the price of Bitcoin to drop near the end of each month. The authors present evidence that out of the 24 months in their sample, the end of month effect is indeed found to be statistically significant,”

Researchers at LongHash are saying the authors of the 2017 bull run paper doesn’t explain why the Bitcoin price drops at the end of each month.

Furthermore, they’re indicating how they have noticed that as soon as two of the most important months, which were December 2017 and January 2018, have dropped, the statistics weren’t as important anymore, but that this wasn’t mentioned by Griffin and Shams.

LongHash Researchers Say Bull Run Paper Authors are Interpreting Whales Wrongly

Pointing out how the authors of the paper on the bull run observe the flowing of the Tether from one whale accounts cluster to another on Bitfinex and the favoring of Bitcoin trades at cut-off prices under $550 increments, LongHash researchers say that that the same authors have found the most significant effects of the Bitcoin price trading whales within a window of three hours, which made them think the effects are becoming stronger prior to a new Tether authorization and interpret this as evidence for price manipulation.

The same LongHash researchers claim whales move short term cryptocurrency prices as a result of exchange slippage, so Shams and Griffin’s paper does a very poor job trying to convince that Tether is in fact manipulating the market.

What Does the LongHash Research Contain?

LongHash wanted to assess the impact of the Tether on the Bitcoin market, so it calculated the Tether Purchasing Power metric. This was done by dividing the market cap of the Tether by the one of the Bitcoin, measuring how much Bitcoin can be bought at the current spot price, with the entire Tether supply. If the ratio is high, then the manipulation has been made with Tether.

The graph is showing that the Tether Purchasing Power had an increase until the 2017 summer of the bull run, after which it started to decrease, right until the year has ended.

Afterwards, it increased throughout the bear market period and reached a peak value towards the end of 2018. LongHash researchers are saying the data indicates that it doesn’t matter if Tether were the ones manipulating the market because their ability to do just so was stronger when the price for Bitcoin was declining, which contradicts the paper saying that the issuance of Tether has caused the 2017 bull run.

Actually, the data indicates the Tether supply didn’t manage to keep up with the height in the market at that point. Furthermore, LongHash researchers are saying the influence of Bitcoin’s prices happens during bear, not bull markets, so the Griffin and Shams paper is contradicted even more.

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