Tether Sentiments Could be Manipulated by Insiders for Creating Arbitrage Opportunities: Report
Tether’s sentiment that has forward correlations with Tether market cap and price can be manipulated and exploited by insiders for arbitrage opportunities, reports Augmento, Big Data and AI service provider, in its latest research.
The firm computed the correlation of the market cap with Tether sentiment for 24 days before/after Tether market cap moves.
In this measured time frame, the strongly weekly shift took place on January 28, 2018, where Tether market cap surged by almost 40%. In total, the market cap rose by over 822%.
Tether’s sentiments, it says
“does not seem natural.”
Negative sentiment clearly dominates the online discourse where the community is intensively interested in Tether-related news but it drops fast as if the community is surprised over and over again by bad news surrounding the stablecoin.
As per the correlation matrix, there is a 12 day “foreshadowing effect” meaning if it’s market cap moves today, accompanied by a rise in sentiments, the chances for the market cap to move again between next 12 to 8 days increases.
Previously there have been reports of Tether using fake accounts to influence the online discourse.
Assuming that Tether has an account on Reddit that it uses to increase sentiment activity, it can employ different types of manipulation.
Further into this presupposing, some big players want to buy big amounts of USDT and Tether chooses to get USDT over-the-counter at a fixed price at a small discount.
Since large bank transfers require a few days to proceed, a time gap formed that might be used by the stablecoin issuer to spread FUD to manipulate the price and buy USDT from the market with a discount and then sell it over-the-counter without affecting the market price.
The report finds that sentiments spikes often before or at the time when Tether price drops.
“Spikes in sentiment show strong forward correlations with falling Tether price. The correlations increase until the day the price drops.”