The 2017 Bitcoin bull run remains one of the most defining moments in cryptocurrency history. The Bitcoin price skyrocketed from under $1,000 to nearly $20,000, turning early adopters into overnight millionaires and catapulting the digital currency into mainstream attention. However, new research casts doubt on whether this surge was organic, suggesting a single large player may have artificially inflated Bitcoin’s value using Tether (USDT).
The Shocking Findings: Was Bitcoin’s Rise Engineered?
A groundbreaking study by finance professors John Griffin (University of Texas) and Amin Shams (Ohio State University) reveals that half of Bitcoin’s price surge from March 2017 to March 2018 may have resulted from coordinated trading between Bitcoin and Tether, rather than genuine market demand.
The research suggests that an unidentified Bitfinex account used Tether to create an artificial buying frenzy, pushing up Bitcoin’s price dramatically.
“We find that the identified patterns are not present on other flows, and almost the entire price impact can be attributed to this one large player,” wrote Griffin and Shams in their study.
The Bitfinex and Tether Connection
Tether, a so-called stablecoin pegged to the U.S. dollar, is controlled by Tether Ltd, a company with direct ties to the Bitfinex exchange. Both companies share ownership and key executives, making the link between Tether issuance and Bitcoin’s price movements even more controversial.
Earlier this year, Tether surpassed Bitcoin in daily and monthly trading volume, making it the most traded cryptocurrency. However, suspicions over whether Tether is fully backed by USD reserves and its alleged role in price manipulation have fueled ongoing investigations by U.S. federal prosecutors.
A Single Entity Responsible for a $310 Billion Surge?
During Bitcoin’s meteoric rise, the cryptocurrency’s market capitalization ballooned from $16 billion to a staggering $326 billion. However, according to the research, much of this growth can be linked back to a single trading entity, which the researchers labeled as “1LSg” in their study.
“If it’s not Bitfinex, it’s somebody they do business with very frequently,” Griffin told The Wall Street Journal, which first reported the study.
The researchers examined 200 gigabytes of blockchain transaction data, mapping Bitcoin and Tether movements to identify suspicious patterns. Their findings suggest that Bitcoin’s historic surge was not solely due to organic demand from institutional investors, but rather strategic market manipulation.
What This Means for Bitcoin Traders and Investors
Bitcoin’s dramatic fall to $3,500 in 2018 was widely attributed to regulatory fears and a cooling of institutional interest. However, this new research raises fresh concerns about the legitimacy of Bitcoin’s valuation and whether market manipulation still plays a role in its price movements today.
Despite these concerns, Bitcoin has since recovered above $10,000, with renewed interest from major corporations like Facebook, which announced plans for its own cryptocurrency, Libra. However, Libra has faced significant regulatory pushback, casting uncertainty over whether mainstream companies can successfully integrate crypto into the global financial system.
The Bigger Picture: Will Bitcoin’s Future Be Built on Trust?
The findings of this study could shake confidence in Bitcoin’s price history, particularly for those who believed institutional investors were behind the 2017 rally. As regulators intensify scrutiny on Tether and Bitfinex, the crypto community will be watching closely to see whether similar manipulation tactics persist.
For now, Bitcoin remains the most valuable cryptocurrency, but this research serves as a cautionary reminder that the crypto market is still vulnerable to manipulation—and that the forces driving price movements may not always be what they seem.