Researchers find that one person likely drove Bitcoin from $150 to $1,000

Wow, this paper&#x27;s conclusion is delayed by 3 years. Willy and Markus bots are old news for anyone who has been following bitcoin closely. The source of all these allegations was this blog appearing in 2014:<p><a href="https:&#x2F;&#x2F;willyreport.wordpress.com&#x2F;2014&#x2F;05&#x2F;25&#x2F;the-willy-report-proof-of-massive-fraudulent-trading-activity-at-mt-gox-and-how-it-has-affected-the-price-of-bitcoin&#x2F;" rel="nofollow">https:&#x2F;&#x2F;willyreport.wordpress.com&#x2F;2014&#x2F;05&#x2F;25&#x2F;the-willy-repor...</a>

Study: Price Manipulation in the Bitcoin Ecosystem<p>Citation: Neil Gandal, JT Hamrick, Tyler Moore, Tali Oberman, Price Manipulation in the Bitcoin Ecosystem, Journal of Monetary Economics (2017)<p>Link: <a href="https:&#x2F;&#x2F;doi.org&#x2F;10.1016&#x2F;j.jmoneco.2017.12.004" rel="nofollow">https:&#x2F;&#x2F;doi.org&#x2F;10.1016&#x2F;j.jmoneco.2017.12.004</a><p>DOI: 10.1016&#x2F;j.jmoneco.2017.12.004<p>Abstract: To its proponents, the cryptocurrency Bitcoin offers the potential to disrupt payment systems and traditional currencies. It has also been subject to security breaches and wild price fluctuations. 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. 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.<p>Highlights:<p>• Suspicious trades on a Bitcoin currency exchange are linked to rises in the exchange rate.<p>• A single actor likely drove the USD&#x2F;BTC exchange rate from $150 to $1000 in 2 months.<p>• Trading volume on all exchanges increased greatly on days with suspicious activity.<p>• Unregulated cryptocurrency markets remain vulnerable to manipulation today.

I suspect this is going on today. Cryptocurrency traders place a lot of faith in the exchanges. A bad actor at an exchange could manipulate a price upwards:<p>- Create a ton of volume and potentially and upward trend (two bots trading with one another, increasing the price each time)<p>- Generate hype around a coin<p>- Let FOMO take over<p>If things start to go south, disable withdrawals, deposits, or freeze the market until you can get it under control.<p>I doubt any of this manipulation is even illegal?

The paper is written rather... colloquially. Not necessairly a problem. But it seems mostly concerned with telling the story, and that a huge buyer in the market causes prices to go up. That&#x27;s not market manipulation.<p>However, there is also the claim that the buyer did not actually have to pay for the BTC they bought. Well, that&#x27;s certainly a (very strong!) form of manipulation, but it&#x27;s not what people traditionally mean when they use the phrase. There is normally an expectation that you have real money and are following exchange procedures, but simply behaving in a way that is frowned upon or considered unfair&#x2F;detrimental to the reputation of the market. As far as I can tell, people are still worried about traditional manipulation in Bitcoin markets, for things like marking the close. The behaviour described here is more akin to hacking&#x2F;traditional fraud - it is not zero-sum.

Bitcoin topped out as soon as the futures went live. Massive contango on a regulated futures market may have been a factor in &quot;reeling in&quot; price. The spot market is so thin that it didn&#x27;t seem to take much open interest in the futs to whip the underlying.<p>It&#x27;s conceivable that some spot exchanges are or were still from 2017 to now, either malicious and&#x2F;or incompetent, which would facilitate the continuation of such behavior, likely by more players than one or two.

The paper is available online at <a href="http:&#x2F;&#x2F;weis2017.econinfosec.org&#x2F;wp-content&#x2F;uploads&#x2F;sites&#x2F;3&#x2F;2017&#x2F;05&#x2F;WEIS_2017_paper_21.pdf" rel="nofollow">http:&#x2F;&#x2F;weis2017.econinfosec.org&#x2F;wp-content&#x2F;uploads&#x2F;sites&#x2F;3&#x2F;2...</a><p>I wouldn&#x27;t call it a particularly rigorous analysis and it provides no more incite than what has been published about Willy before.<p>Mark Karpeles fraudulently buying up $112 million worth of bitcoin in two months when there was no fiat on the other side of the trade pushed the Bitcoin price up. It&#x27;s as simple as that.

If you haven&#x27;t read the recent NYTimes article on the topic of cryptocurrencies, you should check it out: <a href="https:&#x2F;&#x2F;www.nytimes.com&#x2F;2018&#x2F;01&#x2F;13&#x2F;style&#x2F;bitcoin-millionaires.html" rel="nofollow">https:&#x2F;&#x2F;www.nytimes.com&#x2F;2018&#x2F;01&#x2F;13&#x2F;style&#x2F;bitcoin-millionaire...</a><p>At the end of an article is an anecdote about an older (for Silicon Valley) woman who states &quot;And maybe I’m going to lose [my investment of $12k].. Maybe I’m going to keep cleaning houses. But something is telling me I can trust this generation.&quot;<p>My worry is that (1) people like this woman who don&#x27;t understand markets, let alone cryptocurrencies, will get burned by this, and (2) some small set of people who do understand markets will take advantage of those who don&#x27;t.<p>This could result in a situation in which techies are blamed, like Wall Street, for causing lots of people to lose money (and -- let&#x27;s face it -- lots of people will lose money, if not now then at some point).

Explains a lot. A casual review of many coin price histories gives you the sense that something might be &quot;off,&quot; although that is just my subjective view.<p>Another one: coins in general would have been far better off without this current pricing bubble.

Is this serious scientific research? Looks like a joke to me, or very bad journalism:<p>&gt;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.<p>So price action happens based on trading activity, wow what a shocking conclusion. Here I was thinking prices went up and down randomly for no reason!<p>&gt;The team found that many instances of price manipulation happened simply because the market was very thin for various cryptocurrencies including early Bitcoin.<p>Hmmm this seems to imply supply and demand also have some sort of effect on price movement. Another shocking discovery!<p>&gt;As mainstream finance invests in cryptocurrency assets and as countries take steps toward legalizing bitcoin as a payment system (as Japan did in April 2017), it is important to understand how susceptible cryptocurrency markets are to manipulation.<p>And they came to this final fantastic conclusion about the present (2017&#x2F;2018) based on alleged manipulation that happened 4 years ago on an exchange that no longer exists. Fascinating research indeed. &#x2F;s

Interesting. I am curious to know who drove up the Bitcoin price to $18K.

It&#x27;s interesting to imagine this being &quot;good&quot; from the chains point of view. It is &quot;using&quot; predictable human greed to create a situation where it absorbs more and more value. The game Go&#x27;s complexity cascades from very simple rules and has a &quot;life&quot; to it sustained by human energy. Blockchain&#x27;s may be the first of games that are tied into reality via economic effects. Games do this already, but not at these levels of global mindshare and value.

As an interesting thought experiment, consider that VC is a tiny asset class. Now consider that if the amount invested in crypto were the same as is invested in VC, the market cap of crypto would be over 100 trillion dollars. At least if you assume a fixed ratio of dollars invested to market cap.

Not to sound pedantic, but the singular verb <i>finds</i> in the title needs an edit please :)

What&#x27;s the nature of the suspicious trades?

Right. Now to drive it from $14,000 to $100,000.<p>To the moon! &#x2F;s

Winklevoss?

Good ol&#x27; pump and dump.

The number of seemingly throwaway accounts (created in the last few days) commenting on this thread is interesting too:<p>- <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;threads?id=astund" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;threads?id=astund</a><p>- <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;threads?id=simplemath__" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;threads?id=simplemath__</a><p>- <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;threads?id=zhjansbnas" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;threads?id=zhjansbnas</a><p>- <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;threads?id=barbegal" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;threads?id=barbegal</a>

All crypto markets have always been shallow and rife with manipulation.<p>It&#x27;s still almost a total free-for-all.

&gt;The bottom line is simple: if Bitcoin wants to be taken seriously it probably should be this easy or legal to manipulate the markets.<p>wat

Why is this news? Back in the early stages of Bitcoin this was the reason people bail on bitcoin.

People do not realize how manipulated the traditional financial markets are otherwise known as Wall Street. Cryptocurrency is less manipulated as it&#x27;s run by a different culture of people.