And it didn’t take much to do, either, sayeth the numbers.

Pretty much everything about cryptocurrencies is imaginary. Its use as a method of exchange is broadly imaginary, the bolder projections of its most ardent advocates appear to be the product of magical thinking, almost all of the trading done in it is fake. At its most basic level, as an intangible thing a ghost dreamed up once, it is by definition imaginary. Is it any wonder, then, that its heady late-2017 rally and peak at nearly $20,000 was also illusory, the hottest of all of the many fever dreams (and kidney stones) to befall bitcoin and its adherents?

The study reviewed the period between March 2017 and March 2018, when the price of bitcoin soared and its total market value rose to $326 billion. About half of that increase was due to the influence of a manipulation scheme, according to the study’s authors.

The study reviewed the period between March 2017 and March 2018, when the price of bitcoin soared and its total market value rose to $326 billion. About half of that increase was due to the influence of a manipulation scheme, according to the study’s authors.

And wouldn’t you know that this particular fish almost certainly rotted from the head?

The paper doesn’t definitively conclude who the manipulator was. But it strongly suggests Bitfinex executives either knew of the scheme or were aiding it….

If the price of bitcoin was manipulated, this would undermine a key feature of the crypto market, said Mr. Shams. “The promise of a decentralized financial system was that it would be free from the influence of banks and governments,” he said. “Ironically, there are large, new entities that have gained centralized control….”

The study looked at 95 nonconsecutive hours that comprised the largest percentage of tether dispersals. This showed a consistent pattern: In the three hours before those dispersals, the price of bitcoin was falling. Immediately after the dispersal, the price began rising. Those 95 hours accounted for 59% of bitcoin’s compounded returns between March 2017 and March 2018.

“Even a fairly small amount of capital can manipulate the price of bitcoin,” Prof. Griffin said.

Tell us more about the unshakable fundamentals of this currency of the future, Mr. Novogratz.

Large Bitcoin Player Manipulated Price Sharply Higher, Study Says [WSJ]