Recent research by LongHash, a blockchain analytical platform, finds previously published evidence that Tether was manipulating the Bitcoin price to be lacking. According to the research, Tether’s potential influence on the Bitcoin price would be maximal during bear markets, not bull.
As COIN360 reported earlier, two professors claimed that the Bitcoin price push to $20,000 in December 2017 was caused by a single whale’s transactions on Bitfinex involving Tether coins. In response to the research, the Tether issuer denied all accusations and argued that the authors did not have any “accurate data on the crucial timing of transactions or the flow of capital across different exchanges,” therefore, they could not identify a valid sequence of events that could have led to the alleged manipulation.
LongHash research endorses Tether’s view on the matter and finds the proof of Tether market manipulation unconvincing. To measure Tether’s potential to manipulate the crypto market, LongHash introduced a metric called “Tether Purchasing Power”. It is calculated as the market cap of Tether divided by the market cap of Bitcoin and shows the number of bitcoins that can be bought with Tether supply at its current spot price. The higher the Tether Purchasing Power, the bigger Tether’s potential to manipulate the market is.
According to the LongHash chart, the metric was rising in the first half of 2017, but gradually declined by the year’s end, exactly when the Bitcoin price reached its all-time high. Amid the 2018 bear market, Tether Purchasing Power went up and reached its peak in December. So according to LongHash, it shows that Tether’s ability to manipulate the market is stronger when the Bitcoin price is low. As they point out, the results “contradict the claim that Tether issuance drove the 2017 bull market.”