According to a new paper by University of Texas finance professor John Griffin, and graduate student Amin Shams, Bitcoin’s price may have been artificially inflated in its run-up last December to nearly $20,000 per coin.
It was just seven months ago that some of the internet’s most insufferable assholes told anyone that would listen about the newest force in the global currency market. It was a coin, made of digital 1’s and 0’s, that would disrupt the very idea of currency, a project so revolutionary that we’d all be rich, if only we had the resolve to “HODL.”
And some did. During Bitcoin’s most recent boom, millionaires were made — a handful of billionaires too.
Others bought at the peak of the hype cycle, mortgaging homes and other assets to get in early and ride the rocket to its next station, which was the “moon,” according to cryptocurrency types.
Instead, they saw the asset falter. First losing half of its value in January, before a brief rally breathed new hope into the market, only to painfully extract it in the following weeks.
Now, Bitcoin’s value sits at just $6,500, a nearly 70 percent decrease in value over that span. If this were a stock, this is the point at which shareholders might begin to consider liquidating assets.
But in cryptocurrency, nothing is what it seems.
According to Professor Griffin — who has a history of spotting fraud in financial markets — we were all victims in what could be a massive price manipulation scam.
Griffin looked at the flow of digital tokens entering and leaving one of the largest cryptocurrency exchanges, Bitfinex, and identified several patterns that would suggest someone, or a group of people, had successfully propped up prices when they’d flattened at other exchanges.
To push up the price when it sagged elsewhere, someone or some people, at Bitfinex purchased Bitcoin using a secondary currency known as Tether. Tether was created, and sold, by the owners of Bitfinex. Tether’s creators claim the currency is backed by the US dollar, providing a hedge against volatility in cryptocurrency markets. Simply put, it allowed investors to offload Bitcoin (or other cryptocurrencies) into Tether during wild price swings as a means to avoid substantial losses.
Professor Griffin and Mr. Shams examined the flow of Tether and determined that roughly half of Bitcoin’s price in 2017 could be traced to the hours immediately following its movement into other exchanges — typically during periods where cryptocurrencies were in decline. Coin prices at marketplaces that used Tether exceeded those of exchanges that did not, according to the researchers. The pattern ended earlier this year when Bitfinex stopped issuing new Tether.
Bitfinex executives have denied the exchange was involved in any manipulation. The company, told the New York Times today that it never engaged in “any sort” of market or price manipulation and that “Tether issuances cannot be used to prop up the price of Bitcoin or any other coin/token on Bitfinex.”
Regulators don’t seem to be as sure. Late last year, the US Commodity Futures Trading Commission subpoenaed Bitfinex, and Tether — both of which share a CEO — for a closer look.
Things got worse for the company from there, as it cut ties with a third-party auditor, Friedman LLP., over its failures in auditing the supply of Tether in a “reasonable timeframe.”
Friedman, however, was never hired to look at the reliability of Tether’s records, just to prove that the stated amount existed — the equivalent of writing random numbers in an accounting ledger, and then hiring a firm to prove that there are numbers in an accounting ledger. The scope of Friedman’s audit was limited, and remains unfinished.
According to the New York Times, two others have come forward to back Griffin’s research. University College London professor Sarah Meiklejohn said the analysis “seems sound” and chief economist at blockchain data analysis company Chainalysis, Phillip Gradwell, said the study “seems credible.”
What this means for Bitfinex, Tether, or cryptocurrency markets as a whole remains to be seen.
Ripple Prediction: XRP Could Reportedly Rally Against Bitcoin (BTC)
According to the latest reports, Ripple’s digital asset XRP could be soon rallying against Bitcoin.
The token’s price has formed major support near 0.0000900BTC against BTC. XRP seems to be preparing for an upside break above 0.0000920BTC and 0.0000950BTC in the near term
XRP price analysis
During the past few days, there have been range moves below 0.0000920BTC in the price of XRP against BTC.
XRP to BTC has reportedly declined a few points below the 0.0000910BTC and 0.0000900BTC levels, but downsides were limited, says Etehreumworldnews.
They conclude by saying that XRP is definitely getting ready “preparing for the next crucial break either above 0.0000920BTC or below the 0.0000885BTC support. The current price action is positive, suggesting high chances of an upside break above 0.0000920BTC. If not, XRP to BTC could break the 0.0000885BTC support and trade towards the 0.0000850BTC or 0.0000840BTC level in the near term.”
What’s in the cards for Ripple and XRP?
XRP forecast regarding the price for 2019 looks positive especially considering that the coin’s price is somehow related to Ripple, the company’s developments.
Back in September 2018, XRP was able to surge by 300% triggering massive excitement in the Ripple and XRP community.
Since then, Ripple’s products became adopted by more banks and financial institutions, and today, for instance, RippleNet include about 200 members.
Just recently, Euro Exim Bank flaunted the massive benefits of using Ripple’s xCurrent and xRapid:
“Operating collaboratively with Ripple and selected counterparts, we are implementing both xCurrent [payments processing solution] and xRapid [on-demand liquidity solution] building on its extensive technological capabilities and blockchain expertise in trading systems.”
Brad Garlinghouse said that more banks would be flipping the switch and starting to use XRP as well.
Are Bitcoin Tumblers Smart to Use or Do They Bring Unwanted Attention From Regulators
A bitcoin tumbler site that offers users untraceable cryptocurrency, BestMixer, could have tainted many wallets by giving them small amounts of BTC as gifts, a practice called crypto dusting.
According to a cryptocurrency security firm, Cypher Trace, if your wallet was among those that received the gift then you may be holding laundered coins. The company believes that, although BestMixer’s owners are compliant, they could have transacted with an alleged money launderer, without consent or knowledge.
According to the CEO of Cipher Trace, David Jevans, wallets that dealt with BestMixer could attract attention from relevant regulators. He also believes that anyone using a tumbler site could be suspected of questionable motives.
It All Started In October 2018
BestMixer began the promotional campaign in October 2018, whereby it set BTC to wallet addresses, adding a promotional message for their tumbler services. The amount sent was minuscule, and ranged between 666 and 888 satoshis.
BestMixer allows people to transact completely anonymously, enabling them to remain private when swiping funds with others. The funds are sourced from different pools, depending on the privacy level a person requires.
The tumbler site also perfects on a time delay in the intention of making it hard for blockchain analysts to trace transactions.
Cryptocurrency Payments No Longer Anonymous
Tracing cryptocurrency transactions used to be difficult, and lack of AML/KYC control made it difficult to link a person to their wallet addrc Be of this, criminals found an opportunity to use the mediuurm for their illicit activities; with platforms such as Silk Toad become more popular in the belief that bitcoin is untraceable.
After a Tumultuous 2018 for Crypto and the Birth of Stablecoins, Here is what to Expect in 2019
2018 was the year of the bear run and the stablecoin. So what does 2019 hold for the crypto world? While it is impossible to tell what exactly will happen in 2019, one can make a good guess. Here are the five likely scenarios that will play out in 2019 for crypto:
Tether Will Lose Traction
For years, there have been issues raised about how legit Tether is. Despite this, it has remained a popular stablecoin in the crypto world.
However, rival stablecoins such as Coinbase, Circle, and Gemini could offer a challenge. This will erode the monopoly that it has enjoyed in the past. Even if Tether does not shutter as Basis did at the end of 2018, it will most likely not be as dominant.
Facebook Will Mint The WhatsApp Crypto
Facebook has been interested in creating a payments platform for years. The effort started in 2014 when it poached David Marcus of PayPal.
Marcus became the head of messaging products at the company. However, he was picked to head the company’s blockchain project in 2018, which is still shrouded in mystery. Recent reports indicate that he might launch a WhatsApp-based remittance service in India. After a rough period in 2018, the company could use a win in 2019.
The Regulators Will Go After Big Fish
The SEC will take on the major players in crypto in 2019. For instance, it might decide that XRP is unregistered security.
If that happens, Ripple could be hit with huge fines. It might also decide to shut down an exchange for not adhering to anti-money laundering laws. Besides that, celebrities who have used their star power to pump ICs might be in trouble.
The Bitcoin ETF Gets Approved
As the crypto world evolves, it could help the stage for a BTC traded fund also called an ETF. After the bubble burst, investors that are more reasonable are joining the crypto world.
Right now, a firm called Bakkt, created by those behind the NYSE wants to launch a BTC futures market. This could help to improve liquidity in the crypto world. Thus far, it is known that an SEC commission is seeking to have the BTC ETF approved. Before that, a VanEck might or might not be approved next month. It is worth noting how that works out.
The Bear Run Persists
The crypto world has been in a bear run since they reached a high in 2017. Right now, various factors such as volatility in the equity market, a possible economic recession, and global geopolitics might reduce appetite for crypto assets for now.
However, there is a bit of disagreement on this. Some experts believe that prices might bounce back soon. Others believe that crypto prices have not hit their low yet.
There is a lot of agreement and disagreement over whether these predictions will happen. However, there is quite good evidence to support them if you look at the crypto world right now. It is also worth noting that this is a young industry and anything is possible.