‘Clairvoyant whale’ may have caused Bitcoin to surge upwards

New research says single large trader lay behind cryptocurrency’s climb to record highs

Bitcoin’s searing run up to $20,000 in 2017 was almost certainly the work of a single trader, according to University of Texas Professor John Griffin and Ohio State University’s Amin Shams, Bloomberg News reported on Monday.

Griffin and Shams’ work updates a claim first published last year. They have since reiterated that one entity on the Bitfinex cryptocurrency exchange appears capable of pushing up the Bitcoin price once it falls below certain thresholds, Bloomberg said.

Bitcoin, which was created in January 2009, traded fairly steadily in a range of around $300-$800 for years until around May 2017. In the space of just seven months, the price blew up to a record just shy of $19,000 (£14,700), before tumbling to barely a sixth of that level a year later.

In their updated research, Griffin and Shams analysed transactions of Bitcoin and Tethe, a digital token that is meant to hold its value at $1. They said that trading patterns on Bitfinex – a crypto exchange that is Tether’s sister firm – suggested that a single large account holder, sometimes referred to as a “whale” in trading circles, was responsible and that such patterns were “not observed by other exchanges,” according to Bloomberg.

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“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,” the research says.

Bitfinex has been the subject of headlines more than once in the last few years. The British Virgin Islands-registered company was the victim of one of the biggest cryptocurrency heists in 2016, when hackers stole $72m (£56m) worth of Bitcoin. This year the New York attorney general’s office accused the company of covering up an $850m loss with cash reserves from Tether.

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