Bitcoin, the most popular cryptocurrency by many measurements, isn’t half as controversial as Tether — the controversial coin that has polarized the entire crypto community. Tether somehow has become the bad boy of crypto and has frequently been linked to market price manipulation, but its recent moves have failed to make an impact on NEO and EOS.
Is It Getting Harder to Pump Crypto Prices Now?
Tether and one of the largest crypto exchanges in the world, Bitfinex, were accused of manipulating Bitcoin prices when BTC topped out at nearly $20,000 last winter. But a lot has changed since then. Bitcoin prices have failed to take off again, and $8,000 has seemed unlikely for most of the year.
A research report from a University of Texas professor showcases a clear relationship between Tether, Bitfinex and Bitcoin prices, making the manipulation look obvious. Both Bitfinex and Tether were subpoenaed by the Commodity Futures Trading Commission (CFTC) in December last year but weren’t accused of any wrongdoing.
The company’s website suggests that Tether coins (or USDT) worth $2.8 billion have been issued to date. Tether is also the first stable coin in the world as it is pegged to the US dollar, which means that the price for each coin is close to $1.
A recent report by Chainalysis shows that during last year’s peak, Tether was linked to Bitcoin, Ether and Litecoin 85 percent of the time, while that correlation has dropped by 93 percent now.
Can Tether Affect Anything Other Than Bitcoin?
Between January and June 2018, Tether was correlated highly to EOS and NEO. According to the Chainalysis report:
“While on-chain transaction activity was in decline for the major cryptocurrencies, traders were still seeing opportunities for profit with some of the newer, lower-volume cryptocurrencies.”
Tether could be linked to the two currencies and their price manipulations. The paper concludes:
“High volatility for low-volume Tether trading pairs is a typical sign of pump and dump activity. A sudden spike in a particular trading volume followed by an abrupt decline is characteristic of price manipulation.”
Tether has recently created $515 million in new tokens which were sent straight to Bitfinex. About 80 percent of these tokens were then sent to six different exchanges, namely Binance, Bittrex, Huobi, Kraken, OKEx and Poloniex. However, EOS and NEO prices failed to rally because of Tether. In fact, EOS fell by 37 percent, while NEO went down 44 percent.
The data prompts many questions to be asked — was Tether’s correlation with Bitcoin and Ethereum last year just a coincidence? Does Tether actually have the alleged ability to manipulate prices of major cryptocurrencies, especially beyond BTC? If yes, to what extent? If markets are being manipulated using Tether, why aren’t the BTC-ETH results being replicated in NEO and EOS? Are crypto markets just more difficult to manipulate now?