Last year's spike in Bitcoin values may have been caused by market manipulation by one cryptocurrency exchange.
A new research paper has highlighted apparent market manipulation by the exchange Bitfinext, to keep the value of Bitcoin artificially high, and to raise it event further.
Bitcoin sharply rose to a high of just below $20,000 late last year, having barely gone above $5,000 before late October and $10,000 in November. The cryptocurrency has now dropped back to $6,500.
The paper, by John M. Griffin and Amin Shams of the Department of Finance, University of Texas, analysed bitcoin trading from March 2017 to March 2018, and found patterns which they suggest mean Bitcoin was being stabilised by another digital currency, Tether.
Griffin said that figures suggest that Bitfinex issued new Tether currency, and used it to buy up Bitcoin, whenever Bitcoin's price started to fall on other exchanges. The analysis also showed similar patterns related to other cryptocurrencies Dash, Ethereum, Classic, Ethereum, Litecoin, Monero, and Zcash.
The paper states: "Using algorithms to analyse the blockchain data, we find that purchases with Tether are timed following market downturns and result in sizable increases in Bitcoin prices. Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in Bitcoin and 64% of other top cryptocurrencies.
"Overall, we find that Tether has a significant impact on the cryptocurrency market. Tether seems to be used both to stabilize and manipulate Bitcoin prices."
Bitfinex, which is registered in the Caribbean with offices in Asia, was already subpoenaed in January by the US Commodity Futures Trading Commission, over concerns about the validity of Tether.
Bitfinex executives have consistently denied market manipulation.