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posted by mrpg on Thursday June 14 2018, @04:39AM   Printer-friendly
from the fake-money-fake-news dept.

The price of Bitcoin went on a tremendous bull run that peaked in late 2017. The New York Times is reporting that an academic paper suggests that the price of Bitcoin was being manipulated. They argue that the sudden gain in value in Bitcoin and other virtual currencies in the last year was caused by a small group of participants, particularly the cryptocurrency exchange Bitfinex.

Mr. Griffin looked at the flow of digital tokens going in and out of Bitfinex and identified several distinct patterns that suggest that someone or some people at the exchange successfully worked to push up prices when they sagged at other exchanges. To do that, the person or people used a secondary virtual currency, known as Tether, which was created and sold by the owners of Bitfinex, to buy up those other cryptocurrencies.

This paper follows another paper published in 2017 that tied the sudden and large increases in Bitcoin value seen in late 2013 to manipulation by the currency exchange M. Gox.


Original Submission

 
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  • (Score: 0, Interesting) by Anonymous Coward on Thursday June 14 2018, @04:49AM (14 children)

    by Anonymous Coward on Thursday June 14 2018, @04:49AM (#692701)

    Who would publish such an analysis if it was worth anything? You can just go on reddit/forums and see people knew to watch what was going on with tether to decide how to trade the entire time. Whatever is going on behind the scenes'with tether is still not proven and this paper doesnt help at all, it only finds obscure correlations between tether and bitcoin activity.

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  • (Score: 2, Insightful) by Anonymous Coward on Thursday June 14 2018, @04:54AM (1 child)

    by Anonymous Coward on Thursday June 14 2018, @04:54AM (#692705)

    The most amazing thing is that someone might possibly think that some kind of "study" was necessary to ascertain this. I've got a butt-chain that you may want to invest in! Don't be the guy at the end of the human centipede!

    • (Score: 1, TouchĂ©) by Anonymous Coward on Thursday June 14 2018, @06:02AM

      by Anonymous Coward on Thursday June 14 2018, @06:02AM (#692729)

      Which end?

  • (Score: 5, Interesting) by maxwell demon on Thursday June 14 2018, @05:01AM (3 children)

    by maxwell demon (1608) on Thursday June 14 2018, @05:01AM (#692710) Journal

    Who would publish such an analysis if it was worth anything?

    Scientists.

    You can just go on reddit/forums and see people knew to watch what was going on with tether to decide how to trade the entire time.

    But that doesn't give you a longer publication list. Face it, not everyone has making lots of money as their highest goal. In particular, if your primary goal is to get rich, you'll probably not choose to go into science.

    --
    The Tao of math: The numbers you can count are not the real numbers.
    • (Score: 1, Interesting) by Anonymous Coward on Thursday June 14 2018, @05:21AM (2 children)

      by Anonymous Coward on Thursday June 14 2018, @05:21AM (#692720)

      I dont buy it, theres so much more interesting stuff for a scientist to look at than "the flow of digital tokens in and out of bitfinex". Also, the analysis seems to (quote that part if I missed it) just ignore that many, many other people were watching these same flows in real time and responding to them. Its all public data. I dont think someone with scientific motivations would leave out the most interesting and unique aspect.

      • (Score: 4, Insightful) by Mykl on Thursday June 14 2018, @05:34AM (1 child)

        by Mykl (1112) on Thursday June 14 2018, @05:34AM (#692726)

        If I were a Bitcoin rube who ended up losing big on the bubble, but still had a bit of daddy's money lying around, I might possibly throw a few thousand at a researcher to come up with a study that I could later use in a court case...

  • (Score: 1, Informative) by Anonymous Coward on Thursday June 14 2018, @12:38PM (7 children)

    by Anonymous Coward on Thursday June 14 2018, @12:38PM (#692852)

    "obscure correlations"?

    You should actually look at the paper before criticizing the analysis, because guessing what they did and speaking out of your ass makes you look like a dumbass.

    • (Score: 0) by Anonymous Coward on Thursday June 14 2018, @02:04PM (6 children)

      by Anonymous Coward on Thursday June 14 2018, @02:04PM (#692904)

      Why not give an example of x vs y from the paper?

      • (Score: 0) by Anonymous Coward on Thursday June 14 2018, @02:42PM (5 children)

        by Anonymous Coward on Thursday June 14 2018, @02:42PM (#692938)

        From figure 6:

        net hourly flow of Bitcoin and Tether between Bitfinex and two major Tether exchanges, Poloniex and Bittrex, as a function of lagged 3-hour average return.

        Why not net 15 minute flow, and lagged 45 minute returns? Or can we get rid of this ratio of 3 altogether? Is the ratio of 3 important/meaningful or just an arbitrary choice they made to get results that looked how they wanted?

        • (Score: 2, Informative) by Anonymous Coward on Thursday June 14 2018, @05:15PM (2 children)

          by Anonymous Coward on Thursday June 14 2018, @05:15PM (#693015)

          Jesus, it is right in the caption of the figure you call out:

          The graphs show the average flow per quantiles of lagged return, controlling for 3-hour lagged volatility calculated using five-minute returns.

          I understand we're touching on various people's sacred cows here, but geez, they're kicking into full Fox News-style attack-the-messenger mode here. It is actually a pretty thorough paper. For instance:

          To illustrate the potential magnitude and predictive effect of Tether issuances on Bitcoin prices,
          we focus on the hours with the largest lagged combined Bitcoin and Tether flows on the two
          blockchains. These 87 hours have large negative returns before the flows but are followed by large
          return reversals. These 87 events account for less than 1% of our time series (over the period from
          the beginning of March 2017 to the end of March 2018), yet are associated with 50% of Bitcoin’s
          compounded return, and 64% of the returns on six other large cryptocurrencies (Dash, Ethereum
          Classic, Ethereum, Litecoin, Monero, and Zcash).6 A bootstrap analysis with 10,000 simulations
          demonstrates that this behavior never occurs randomly.

          Consistent with Tether being used to buy Bitcoin when prices drop, we find a statistically and
          economically strong reversal in Bitcoin prices, but only following negative returns. The Bitcoin
          reversal did not exist before Tether was prevalent in the market and disappears during the period
          when Tether stops being printed.

          • (Score: 0) by Anonymous Coward on Thursday June 14 2018, @06:38PM

            by Anonymous Coward on Thursday June 14 2018, @06:38PM (#693098)

            What do you think youve demonstrated? Yet another magic number of 5 minutes...

          • (Score: 0) by Anonymous Coward on Thursday June 14 2018, @07:35PM

            by Anonymous Coward on Thursday June 14 2018, @07:35PM (#693129)

            sacred cows

            What sacred cow? Everyone knows tether is shady stuff and would even watch it be created and trade on that public info. Tether could have been 100% backed by people funding the creation of tethers just to get others to have certain expectations and then trading on that, would that still be "manipulation"? This paper doesn't clarify anything about what was going on. Why not answer a real question like "How was the peg maintained"?

            attack-the-messenger mode

            Attaching the messenger would be looking at the authors credentials, public statements, etc. I have no idea who the author(s) even is/are and do not care, so never mentioned or referred to them. Questioning the methods is not attacking the messenger...

        • (Score: 2) by maxwell demon on Friday June 15 2018, @04:40AM (1 child)

          by maxwell demon (1608) on Friday June 15 2018, @04:40AM (#693334) Journal

          If the effect would not exist, would there exist any choice of parameters that showed it?

          --
          The Tao of math: The numbers you can count are not the real numbers.
          • (Score: 0) by Anonymous Coward on Friday June 15 2018, @03:35PM

            by Anonymous Coward on Friday June 15 2018, @03:35PM (#693534)

            Yea... its called p-hacking and entire fields of research, eg psychology and nutrition, are based on doing that.