Is Bitcoin Really Untethered?

By John M. Griffin, Amin Shams. Journal of Finance, 2020

458 citations recorded by the source corpus.

This paper investigates whether Tether, a digital currency pegged to the U.S. dollar, influenced Bitcoin and other cryptocurrency prices during the 2017 boom. Using algorithms to analyze blockchain data, we find that purchases with Tether are timed following market downturns and result in sizable increases in Bitcoin prices. The flow is attributable to one entity, clusters below round prices, induces asymmetric autocorrelations in Bitcoin, and suggests insufficient Tether reserves before month-ends. Rather than demand from cash investors, these patterns are most consistent with the supply-based hypothesis of unbacked digital money inflating cryptocurrency prices.

Subfields: Economics and Econometrics, Information Systems

View Paper: https://www.semanticscholar.org/paper/68474d74d313140d3ab4ae258f515370cddcc684

Citations in the corpus

• How stable are stablecoins? (2021, unknown): “CHORDIA, AND A. GOYAL (2006): “The impact of trades on daily volatility,” The Review of Financial Studies, 19, 1241–1277.”