Critics Savage Research Paper Alleging Lone Whale Caused Bitcoin’s 2017 Rally

Crypto commenters have torn into a new research paper alleging a single whale caused Bitcoin’s 2017 price rally. The paper, reported prominently in Bloomberg and the Wall Street Journal, has been criticized for failing to understand that mass inflows of tether (USDT) to the cryptoconomy are not indicative of a single source accounting for all the buy pressure.

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The Legendary Lone Whale

The final draft of the research paper that’s had Tether’s lawyers seething for weeks has finally been published. Its conclusion – that a ‘lone whale’ was single-handedly responsible for propelling Bitcoin to $20k – has not changed, but the findings have been bolstered by the addition of peer review. Crypto commenters are not impressed, though, and have dismissed the paper as flawed.

Critics Savage Research Paper Alleging Lone Whale Caused Bitcoin’s 2017 Rally

According to the updated paper from University of Texas Professor John Griffin and Ohio State University’s Amin Shams, first published in 2018, BTC buys on Bitfinex increased whenever Bitcoin’s value fell by certain increments. “This pattern is only present in periods following printing of Tether, driven by a single large account holder, and not observed by other exchanges,” concludes the latest iteration of the paper, due for publication in the Journal of Finance. It adds:

Simulations show that these patterns are highly unlikely to be due to chance. This one large player or entity either exhibited clairvoyant market timing or exerted an extremely large price impact on Bitcoin that is not observed in aggregate flows from other smaller traders.

Tether’s General Counsel Stuart Hoegner countered that the paper was “foundationally flawed” and probably published to back a “parasitic lawsuit.” He continued: “This is a transparent attempt to use the semblance of academia for a mercenary money grab.”

Correlation Does Not Equal Causation

Within the cryptosphere, observers were almost unanimous in condemning the research paper. “The venn diagram of people who don’t believe in markets but rather see conspiracies and manipulation everywhere has a perfect overlap with people who are not active in those markets,” tweeted Nic Carter. “It’s exclusively the purview of outsiders to claim the markets are somehow false. Umbrellas cause rain, finds Texas academic.”

Circle CEO Jeremy Allair labeled the WSJ’s story on the matter “extremely weak reporting” and explained that “in 2017/2018 there was demand for buying BTC and a massive alt coin rally. The majority of that demand came from Asia and China, and since there were no CNY ramps into BTC, everyone went to offshore USDT processors. These processors would then generate large prints of USDT. The only thing this supposed analysis shows is that Asia traders demanded fiat to buy BTC.”

Ari Paul echoed Allair’s sentiment, tweeting “Their “research” is based on an elementary misunderstanding of how financial assets work.” Director of research at DAR Lucas Nuzzo wondered “What if the authors misunderstood that large USDT addresses are often highly syndicated, and what appears to be a “single whale” are thousands of different depositors?”

What are your thoughts on the findings of the research paper? Let us know in the comments section below.


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Kai Sedgwick

Kai’s been manipulating words for a living since 2009 and bought his first Bitcoin at $12. It’s long gone. He’s previously written whitepapers for blockchain startups and is especially interested in P2P exchanges and DNMs.


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