Crypto commenters have torn into a new research paper alleging a single whale caused bitcoin’s 2017 price rally. The paper, reported prominently in Bloomberg and the Wall Street Journal, has been criticized for failing to understand that mass inflows of tether (USDT) to the cryptoconomy are not indicative of a single source accounting for all the buy pressure.
The Legendary Lone Whale
The final draft of the research paper that’s had Tether’s lawyers seething for weeks has finally been published. Its conclusion – that a ‘lone whale’ was single-handedly responsible for propelling bitcoin to $20k – has not changed, but the findings have been bolstered by the addition of peer review. Crypto commenters are not impressed, though, and have dismissed the paper as flawed.
According to the updated paper from University of Texas Professor John Griffin and Ohio State University’s Amin Shams, first published in 2018, BTC buys on Bitfinex increased whenever bitcoin’s value fell by certain increments. “This pattern is only present in periods following printing of Tether, driven by a single large account holder, and not observed by other exchanges,” concludes the latest iteration of the paper, due for publication in the Journal of Finance. It adds:
Simulations show that these patterns are highly unlikely to be due to chance. This one large player or entity either exhibited clairvoyant market timing or exerted an extremely large price impact on Bitcoin that is not observed in aggregate flows from other smaller traders.
Tether’s General Counsel Stuart Hoegner countered that the paper was “foundationally flawed” and probably published to back a “parasitic lawsuit.” He continued: “This is a transparent attempt to use the semblance of academia for a mercenary money grab.”