Researchers Find Bitcoin Price Manipulation

Tech Crunch reports:

Researchers Neil Gandal, JT Hamrick, Tyler Moore, and Tali Oberman have written a fascinating paper on Bitcoin price manipulation. Entitled “Price Manipulation in the Bitcoin Ecosystem” and appearing in the recent issue of the Journal of Monetary Economics the paper describes to what degree the Bitcoin ecosystem is controlled by bad actors.

To many it’s been obvious that the Bitcoin markets are, at the very least, being manipulated by one or two big players. “This paper identifies and analyzes the impact of suspicious trading activity on the Mt. Gox Bitcoin currency exchange, in which approximately 600,000 bitcoins (BTC) valued at $188 million were fraudulently acquired,” the researchers wrote. “During both periods, the USD-BTC exchange rate rose by an average of four percent on days when suspicious trades took place, compared to a slight decline on days without suspicious activity. Based on rigorous analysis with extensive robustness checks, the paper demonstrates that the suspicious trading activity likely caused the unprecedented spike in the USD-BTC exchange rate in late 2013, when the rate jumped from around $150 to more than $1,000 in two months.”

This finding doesn't surprise me at all. Indeed, I suspect that the recent advance (which may have hit exhaustion)  may be a manipulation.

I have stated more than once that bitcoin is not a fraud, it is not a Ponzi scheme but it does have the characteristics of a stock market pump and dump.

I suspect the operator(s) are very skilled pump and dump operators who have likely created the greatest pump and dump in history. If they gave out Nobel prizes in pump and dumps, these operators would be a shoo-in.

 -RW

(ht Mark Addleman)