(Mirror Daily, United States) – The first round of volatility when it comes to bitcoin happened in 2013 when its price skyrocketed from $150 to $1,000. But a new study shows that the price hike was the work of only one, maximum two big traders.
According to a TechCrunch report, a study published in the Journal of Monetary Economics proved the traders set in place fake trades to artificially hike the price. The research team focused on fake orders that occurred on the now-defunct Mt Gox exchange.
In 2013, around 70% of bitcon transactions were done on the said exchange. One year later, Mt Gox had to be shut down following a monster scandal about hacking and missing bitcoins.
The recent research focused on suspicious trading activity involving 600,000 bitcoins. The unlawful operations brought the traders $188 million in the cryptocurrency. The research team found that just two bots nicknamed Willy and Markus were behind countless trading operations even though they owned none of the digital coins they were using to trade in.
Bitcoin Price Soared 700% in Just 2 Months
The spike in the transaction volume had a surprise effect as bitcoin’s market value jumped 700% in just a couple of months. In other words, the bots were successful at manipulating prices, meanwhile making a profit of millions of dollars.
Mt Gox did not take action against the bots as the fraudulent activity generated a handsome profit from transaction fees. Study authors warn that history may repeat itself on today’s artificial and illiquid markets.
The number of digital coins has jumped from 80 in 2013 to 843 in 2018. Many of the exchanges lack the tools to prevent price manipulation. Study authors wrote in their paper that “it is important to understand how susceptible cryptocurrency markets are to manipulation.”
The findings contradict the claims of many cryptocurrency peddlers who promote the digital currencies as not being dependent on central banks and governments.
Image Source: Pixabay
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