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Research reveals major price manipulation in the Bitcoin market

by | 16 Jan, 2018

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Researchers have found that a single person was likely to be behind several accounts that bought millions of Dollars worth of Bitcoin, which drove the exchange rate in the U.S. from $150 to $1,000 over a 2 month period in late 2013. 

According to a paper by academics from the Berglas School of Economics in Israel and the Tandy School of Computer Science in the U.S. released at the beginning of January, ‘suspicious’ trades on a world-renowned cryptocurrency exchange were linked to a rise in the exchange rate, while trading volume on all exchanges increased greatly on days with suspicious activity.

The paper, named ‘Price Manipulation in the Bitcoin Ecosystem’ from the Journal of Monetary Economics, describes suspicious trading activity on the Mt. Gox Bitcoin currency exchange, in which approximately 600,000 bitcoins (BTC) valued at $188 million were fraudulently acquired and used to influence prices. The paper said: “During both periods, the USD-BTC exchange rate rose by an average of four percent on days when suspicious trades took place. compared to a slight decline on days without suspicious activity.”

The researchers found that approximately 600,000 Bitcoins, valued at $188 million, were “acquired by agents who likely did not pay for the Bitcoins.” One account, named ‘Markus’, bought a staggering 335,898 bitcoins, worth $76 million, over the course of 225 days.

The paper showed a direct link between fraudulent accounts and price manipulation in the Bitcoin market. Researchers warned that though this took place in 2013, the same kind of manipulation could be occuring in current exchanges too, advising regulators to “begin taking an active oversight role as the Bitcoin ecosystem becomes more integrated into international finance and payment systems.”

Today the Bitcoin price fell below $11,600 after touching over $13,500 yesterday, off the back of yesterday’s  about South Korea weighing up the possibility of more crackdowns on the market, as well as a Bloomberg report today which said the Chinese government plans to block domestic access to local and offshore platforms that provide centralized trading.

Related: Bitcoin crashes just in time for Christmas

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The Invstr technical analysis chart shows Bitcoin prices sliding heavily on Tuesday January 16th

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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