Bitcoin's dramatic price surge in 2017 may have been artificially inflated through market manipulation using Tether (USDT), according to a study by University of Texas researchers John M. Griffin and Amin Shams.

The study found that just 87 hours of Tether trading, representing 1% of total trading activity, could have contributed to a 50% increase in Bitcoin's price. The researchers identified specific patterns where Tether flows increased following periods of Bitcoin price decline.

Key findings from the study:

• Tether flows from Bitfinex to other exchanges increased after negative Bitcoin returns
• Price manipulation was most evident after periods of negative returns and new Tether issuance
• The pattern suggests coordinated efforts to provide price support for Bitcoin

Bitfinex CEO J.L. van der Velde denied these allegations, stating that neither Bitfinex nor Tether has ever engaged in market manipulation.

This isn't the first controversy surrounding Tether:

• The CFTC issued subpoenas to Bitfinex and Tether in December 2017
• Questions persist about whether Tether's 2.5 billion tokens are fully backed by US dollars
• The situation has created demand for alternative stablecoins with better transparency

New stablecoin initiatives have emerged in response:

• Basis, backed by major venture capital firms
• US Dollar Coin (USDC), a collaboration between Circle and Bitmain
• These alternatives promise better governance and transparency

The researchers conclude that proper regulatory framework and market surveillance are necessary for cryptocurrency markets to function as legitimate stores of value and reliable mediums of exchange.

Note: Cryptocurrency investments are highly risky and speculative. Always consult qualified professionals before making investment decisions.

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