A study in which there were concerns about the possible manipulation of the market with a token Tether (USDT), has caused a storm in social networks, which came as detractors and supporters of the cryptocurrency, and those who have not finally determined its position.
In the article, which touches on enough of a controversial topic, Bloomberg analyzed data from the Tether of trading on the cryptocurrency exchange Kraken, and showed some worrying signs, which may indicate market manipulation.
The article was published last Friday and was accompanied by colorful charts and interactive visualizations. The article aims to describe the market token Tether, known as USDT, as opposed to the laws of supply and demand. This article assumes that such a character of trading can be called fictitious transactions (wash trade) is a form of manipulation by the market, where the scams trade with themselves to create a false impression of market demand.
Some have called
this analysis of the data, which includes more than 56 000 trades on Kraken 8 weeks — «a deep dive into suspicious trading model» and the epitome of «why institutional money stays out of the market».
On Sunday, the Kraken exchange published a blog article refuting the analysis of four reporters from Bloomberg, which contributed to the creation of the article. In the recording it was assumed that the authors did not have enough expertise to analyze the data:
«It is terrible to think that legislators read this stuff. Of course, the headline was sensational, and no doubt he attracted a lot of attention. But what about readers who don’t Express their outrage on Reddit and Twitter? What about those who rely on journalistic integrity and the verification of the information?».
Some community members supported the view Kraken. For example, one user stated that absolutely does not support Tether, but cannot overlook the fact that the reporters are ignoring the basics of financial markets.
In addition, a Reddit user has considered the assertion in the Bloomberg article that the increased demand for USDT on Kraken had to temporarily raise the cost of tokens to $1.10. He stated that arbitrage opportunities support the price of about $1.
However, longtime critics Tether these arguments did not convince.
The common position
Despite intense debate, advocates and opponents of the Tether, apparently agree on one thing: not all transactions in this scriptactive are produced for profit by ordinary people.
If you agree with the assumption that a certain amount of Tether purposefully introduced to the markets and bought up by «bots» with the sole purpose of maintaining parity with the dollar, specific and unusual order size and frequency, demonstrated in data from Bloomberg, is beginning to make sense.
Another Reddit user said:
«While the active party intervenes in the market to maintain the peg to the dollar, I am sure that you will repeatedly see the strange actions in the order book… Tether actively manages this in all the exchanges with a couple USDT/USD. If they don’t provide «unlimited» liquidity for buying and selling, the binding will disappear.»
In other words, a strange model of trading as reported by Bloomberg, suggest the action of the Tether behind the cryptocurrency USDT. Maybe it releases coins when their value is high, and buys them at a lower cost to keep the average price of $1.
But if all is OK, this again draws attention to another dispute around the Tether: the potential of the company at some point in time to issue more currency than can be backed by reserves.
Blogger Bitfinex’ed, famous
his struggle with the Bitfinex team, has echoed these concerns and stated that «these bitminer would never let something like Tether to exist due to systemic risk, which carries a cryptocurrency».
However, it is worth noting the basic principles of Economics, the relevant fact noted in the course of this whole discussion. The same concepts of supply and demand, about which it is said in the Bloomberg article, in turn, was referred to the Kraken in order to ensure that they contribute to the stability of prices USDT. They can also be used to indicate the vulnerability inherent in fixed and tied to the asset currency, regardless of whether it is released in the cryptocurrency industry or not.
Tether has issued 250 million USDT. In addition, recently published Tether
a report on the status of their Bank accounts. However, observers of the industry have come to the conclusion that this report with all its findings cannot be considered a full audit.
In March of this year, the team Bitmex Research published
an updated version of its in-depth study Tether. In accordance with data from Puerto Rico support the argument that Noble is a major International Bank, the reserve Bank Tether, and that the island could soon become the 51st state of the United States, is a major center of the cryptocurrency business.