University researchers have noticed an interesting trendwhen it came to atmospheric jump in the price of bitcoin last year: They found that about half of bitcoin price increases last year happened after another cryptocurrency, Tether, flowed from one crypto exchange — Bitfinex — to other exchanges.
This is significant as Tether, which is said to be pegged to the U.S. dollar and created by Bitfinex’s owners, could be used to buy other digital currencies, such as bitcoin. Even so, Bitfinex’s Chief Executive J.L. van der Velde said in a statement, “Tether issuances cannot be used to prop up the price of Bitcoin or any other coin/token on Bitfinex,” The New York Times reported.
That statement comes as a study by University of Texas Finance Professor John Griffin – along with graduate student Amin Shams – is raising questions as to whether bitcoin’s remarkable rise in 2017 was not, in fact, caused by genuine demand from investors. The authors found that Tether was used to purchase bitcoin at pivotal points when the price of the cryptocurrency was falling, according to CNBC.
“It was creating price support for bitcoin, and over the period that we examined, had huge price effects,” Griffin told CNBC. “Our research would indicate that there are sophisticated people harnessing investor interest for their benefit.”
More specifically, Griffin and Shams, honed in on 87 periods when Tether flowed from Bitfinex to other exchanges between March 2017 and March 2018, a report by Entrepreneur noted. And they found that “these 87 events account for less than 1 percent of our time series (over the period from the beginning of March 2017 to the end of March 2018), yet are associated with 50 percent of bitcoin’s compounded return, and 64 percent of the returns on six other large cryptocurrencies (Dash, Ethereum Classic, Ethereum, Litecoin, Monero and Zcash).”
Still, The New York Times reported that the paper’s authors don’t have documents or emails that show Bitfinex knew about the potential price manipulation — and, if that was in fact the case, who might have behind those moves. Griffin and Shams also found that the pattern extends to price increases of Zcash and Ether — both digital currencies that one can purchase with Tether. Notably, these patterns came to a halt after Bitfinex stopped issuing new Tether tokens.
Claims of bitcoin price manipulation are not new: Griffin’s paper comes a few months after researchers Neil Gandal, JT Hamrick, Tyler Moore, and Tali Oberman published a paper on bitcoin price manipulation in 2013, which describes the extent to which the bitcoin ecosystem is controlled by bad actors. According to TechCrunch, the paper, entitled “Price Manipulation in the Bitcoin Ecosystem,” appears in an issue of the Journal of Monetary Economics. The paper claims “suspicious trading activity likely caused the unprecedented spike in the USD-BTC exchange rate in late 2013, when the rate jumped from around $150 to more than $1,000 in two months.”
On Tuesday (June 12), bitcoin hit its lowest price level since February, briefly dipping below the $6,500 mark, Bloomberg reported. On Wednesday, (June 13) at 4:40pm, the price of bitcoin was $6,260.34, according to CoinDesk. The popular cryptocurrency hit a high of $19,511 in December, following a whopping 1,400 percent rise in 2017
Bitcoin Correction to $9,500 Could Be Followed by 20% Drop: Analyst
Bitcoin (BTC) has been absolutely slammed over the past week. Since passing above $13,000 for the second time this year last Wednesday, the crypto has been on a clearly downward-sloping trend.
In fact, as of the time of writing this article, Bitcoin has lost 25% in the past week, falling to as low as $9,300.
Despite the fact that optimists are expecting for bulls to experience some form of short-term reprieve, historical trends and other key indicators predict a further unwinding of the cryptocurrency bull market.
Bitcoin Poised to Hit $7,500
Conceptualized by Trace Mayer, an early Bitcoin investor and funder of Kraken, the Mayer Multiple is a way of determining if BTC is either overbought, fairly valued, or oversold. It is calculated by putting the asset’s current price over its 200-day moving average.
Per an analysis of this indicator (currently sits at 1.6) by CryptoKea, a little-known analyst that accurately called the recent drop to at least $9,700 earlier this month, if you consider the Multiple, the ongoing correction looks much like the first “major correction” of 2017’s bull run.
He notes that if history repeats itself and Bitcoin reverses out of its current short-term bearish trend like it did in 2012 and 2017, it could find support anywhere from $7,148 to $8,700. This corresponds to 1.20 times to 1.46 times of the 200-day moving average, which currently sits at $5,957.
Most likely, however, Kea notes that the “most probable target” as per the use of the Mayer Multiple will be $7,505 — another 20% drop from the current Bitcoin price of $9,600.
This somewhat lines up with the target of $8,000 that other analysts hold. Per previous reports from NewsBTC, Timothy Peterson, a prominent American crypto fund manager, notes that Bitcoin’s current active account figure suggests that BTC is overvalued.
According to Peterson’s model, which takes a 30-day median (as of July 13th) of the number of active accounts on the Bitcoin blockchain, BTC currently has a fair valuation of just above $8,000.
In a tweet issued on Saturday, Josh Rager, a prominent technical analyst and cryptocurrency commentator, looked to this same level. View image on Twitter
Rager notes that a “confluence” of chart data and on-chain data suggests that a pullback “would likely bottom out at $8,000”. As he explained in the chart above, $8,000 acted as a key horizontal support and resistance level in the recent rally and 2018’s crash.
What’s more, there is also a CME Bitcoin futures gap around $8,500, which is one of the last gaps waiting to be filled.
And as Alfonso Esparza, senior market analyst at Oanda Corp, recently told Bloomberg: “[Bitcoin] continues to trade lower as comments from President Trump put downward pressure on the cryptocurrency. It could fall further to $8,000, giving back all the gains made in June.”
Drop Might be Over?
Despite this, one analyst believes that the drop is most likely over. In fact, he drew attention to almost five signs why this may very well be the case, even if it sounds crazy.
Firstly, the one-day Relative Strength Index (RSI) and the Stochastic iteration of this indicator are at their lowest levels since at least February, entering the “oversold” range. The one-day Moving Average Convergence Divergence (MACD) has tapped the zero level, despite the fact that Bitcoin is in a raging bull market according to most analysis.
Also, the Elder’s Forse Index, an indicator meant to exhibit the strength of moves, is at its lowest since November 2018; and historical volatility is almost at 100%, implying a move to the upside to return volatility to levels deemed normal.
Bitcoin Network Is Moving $3 Billion Daily, Up 210% Since April
Bitcoin’s average transaction volume is topping $3 billion per day, data from crypto analytics site Coinmetrics.io reveals as of July 16.
Bitcoin’s Uptrend in Daily Transaction Value Eclipsing Altcoins’
The data — which has been adjusted to remove noise and certain artifacts, per Coinmetrics — shows an impressive uptrend in the USD value for the volume of the coin’s transactions and transfers over the past 90 days.
On April 17, the average daily value was at $1.04 billion as compared with $3.22 billion on July 16, an almost 210% increase.
The top coin has seen a significantly higher spike in volume as compared with ether (ETH), which saw a 77% increase over the same time period — from a daily average of $370 million to $657 million. XRP has seen a still milder uptrend, at 61% — with the value of daily transactions climbing from $152.5 million in mid-April to $245.6 in mid-July.
3-month chart for BTC transactions, transfers, value, adjusted, in USD. Source: Coinmetrics.io
Bitcoin broke the $3 billion daily average mark on July 11, Coinmetrics’ data shows, when the coin was circling the $11,500 price point. Despite trading roughly $2,000 lower as of today — having taken a steep 11.4% hit on the day and over 24% on the week — average daily transaction value has continued to climb.
Commentators have today argued that the coin’s short-term downtrend was triggered by an antagonistic response from the United States government to Facebook’s Libra coin, which has extended to the cryptocurrency space more broadly.
Veteran trader Peter Brandt anticipates that total market cap could now correct by as much as 80% — yet argues that most of the damage will be shouldered by altcoins, not Bitcoin.
On July 7, Cointelegraph reported that Bitcoin’s hash rate had hit a new all-time high of 65.87 EH/s. Nevertheless, despite the week’s price fluctuations, this figure has continued to soar north, reaching almost 73 EH/s to press time.
Bitcoin (BTC/USD) forecast and analysis on July 17, 2019
Cryptocurrency Bitcoin (BTC/USD) is trading at 10835. Cryptocurrency quotes are trading below the moving average with a period of 55. This indicates a bearish trend on Bitcoin. At the moment, cryptocurrency quotes are moving near the middle border of the Bollinger Bands indicator.
Bitcoin (BTC/USD) forecast and analysis on July 17, 2019
As part of the Bitcoin exchange rate forecast, the test is expected to be at the level of 11250. Where should we expect an attempt to continue the fall of BTC/USD and the further development of the downward trend. The purpose of this movement is the area near the level of 9450. The conservative area for selling Bitcoin is located near the upper border of the Bollinger Bands indicator at the level of 11950.
Cancellation of the option to continue the decline in Bitcoin will be the breakdown of the area of the upper border of the Bollinger Bands indicator. As well as the moving average with a period of 55 and closing of quotations of the pair above the area of 12100. This will indicate a change in the current trend in favor of the bullish for BTC/USD. In case of a breakdown of the lower border of the Bollinger Bands indicator bands, one should expect an acceleration of the fall of the cryptocurrency.
Bitcoin (BTC/USD) forecast and analysis on July 17, 2019 implies a test level of 11250. Further, it is expected to continue falling to the area below the level of 9450. The conservative area for selling Bitcoin is located area of 11950. Canceling the option of falling cryptocurrency will be a breakdown of the level of 12100. In this case, we can expect continuation growth.