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Study: Price Manipulation in the Bitcoin Ecosystem Citation: Neil Gandal, JT Hamrick, Tyler Moore, Tali Oberman, Price Manipulation in the Bitcoin Ecosystem, J
by randomdrake 9y ago
Study: Price Manipulation in the Bitcoin Ecosystem
Citation: Neil Gandal, JT Hamrick, Tyler Moore, Tali Oberman, Price Manipulation in the Bitcoin Ecosystem, Journal of Monetary Economics (2017)
Link: https://doi.org/10.1016/j.jmoneco.2017.12.004 https://doi.org/10.1016/j.jmoneco.2017.12.004
DOI: 10.1016/j.jmoneco.2017.12.004
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.
Highlights:
• Suspicious trades on a Bitcoin currency exchange are linked to rises in the exchange rate.
• A single actor likely drove the USD/BTC exchange rate from $150 to $1000 in 2 months.
• Trading volume on all exchanges increased greatly on days with suspicious activity.
• Unregulated cryptocurrency markets remain vulnerable to manipulation today.
- krisives 9y agoTo be fair regulated markets are vulnerable to manipulation today
- prostoalex 9y agoMost exchanges in regulated markets * know and contractually oblige their customers (the brokerages who gain access to the exchange) to avoid self-trading * have some preventative mechanisms, e.g. https://www.theice.com/publicdocs/futures_us/exchange_notices/ExNot091113STPFFinal.pdf https://www.theice.com/publicdocs/futures_us/exchange_notice...
- xenadu02 9y agoThat’s like saying the recent California wildfires are equivalent to the Great Chicago Fire. Both are tragedies and both have a certain element of scale to them, but the Chicago fire was actually much much worse. It killed far more people, made far more people homeless, and destroyed far more economic value (adjusted for inflation). Yes the current regulated markets have serious problems and are in need of reform. But the scale and scope of fraud and manipulation on all crypto currency markets is vastly larger and far more pervasive.
- swimfar 9y agoJust some interesting trivia. Two days after the Chicago fire which killed ~300 people, there was a much bigger fire in Wisconsin that killed 1200-2500 people. Over 300 people just from the town of Peshtigo died. It was a town with only about 1700 residents. It didn't get much media attention, however, because of the Chicago fire. https://en.wikipedia.org/wiki/Peshtigo_Fire https://en.wikipedia.org/wiki/Peshtigo_Fire