Could One "Whale" Really Have Caused Bitcoin's Rally in 2017?
Next month will mark two years since bitcoin hit its all-time high just shy of $20,000. Plenty of people have taken a stab at explaining what happened. Every so often an article or research paper pops up that grabs people's attention.
Last year, University of Texas finance professor John Griffin and a graduate student, Amin Shams, gained attention when they published a research paper saying bitcoin's surge to its highs was a result of manipulation. They claimed at least half of bitcoin's 2017 gains were a result of coordinated price manipulation using another cryptocurrency called tether. The paper suggested tether was used to purchase bitcoin when it was declining, which helped "stabilize and manipulate" bitcoin's price.
"It was creating price support for bitcoin, and over the period that we examined, had huge price effects," Griffin said. "Our research would indicate that there are sophisticated people harnessing investor interest for their benefit."
The two are back with a follow-up to their paper, which is grabbing just as much attention, if not more. Griffin and Shams, who is now a professor at the Ohio State University, believe the manipulation they previously wrote about was a result of "one large player."
"We find that the identified patterns are not present on other flows, and almost the entire price impact can be attributed to this one large player," Griffin and Shams wrote.
They were unable to identify the player, but believe it is "one large account at Bitfinex." They also suggest Bitfinex was aware of the single player causing the supposed manipulation and possibly even part of their scheme.
Both Bitfinex and Tether, which are owned and operated by the same people, are currently being investigated by the Department of Justice for fraud. A $1.4 trillion, yes trillion, class action lawsuit was filed against them last month. Bitfinex, responded to the research report saying the research "lacks academic rigor."
So while this study is certainly interesting it would be even more interesting to see them conduct a similar study on other popular markets and products. Perhaps they could look into whether a large "whale" is behind the daily S&P 500 ramps each morning at the open and into the close or who slams VIX on a daily basis.
The protests are wreaking havoc on Hong Kong's economy. Just a few days after officially sliding into a recession, business activity in Hong Kong's private sector hit its lowest level in 21 years, according to IHS Markit. Demand from China fell to its lowest level since data began in 1998. Bernard Aw, principal economist at IHS Markit, said "Hong Kong’s private sector remained mired in one of its worst downturns for the past two decades during October, with the latest PMI survey signaling a deepening economic malaise."
He won't need the paycheck. According to a filing yesterday, McDonald's recently fired CEO Steve Easterbrook is barred from working at a competitor for two years. The companies include Chick-fil-A, Yum! Brands, Costa and convenience stores WaWa and 7-Eleven. He's also barred from publishing articles or books and giving interviews related to McDonald’s without permission from the company’s general counsel for five years. In related news, Easterbrook's firing also brought down the company's Chief People Officer, who departed the company yesterday.
Surprised he lasted this long. Gary Jones, the president of the United Auto Workers union, has taken an indefinite leave of absence amid an investigation into whether Fiat Chrysler Automobiles made illegal payoffs to UAW officials. Federal investigators reportedly have evidence such as bank records, cooperation with labor officials and undercover recordings where Jones discussed committing crimes. In August the FBI searched Jones' home as well as a union retreat and multiple other locations. He will be replaced by Rory Gamble, who recently led the negotiations with Ford.
Think of how much money they spent to come up with this. Facebook has unveiled a new logo, which it will use to differentiate the parent company Facebook from the suite of services it owns such as Facebook, Instagram and WhatsApp. The company said in a release "Today, we’re updating our company branding to be clearer about the products that come from Facebook. People should know which companies make the products they use." For Facebook's sake, hopefully people who were unaware they owned Instagram don't see the new branding and decide to #DeleteInstagram. The new branding will be rolled out over the next few weeks.
He's not too concerned. Microsoft CEO Satya Nadella said Microsoft will proceed with the Department of Defense's $10 billion Joint Enterprise Defense Infrastructure (JEDI) contract despite employee push back. Nadella said "We start by having respect for all views, of all of our employees. It’s not necessary for all of the 100,000-plus people at Microsoft to agree on everything, but for us, as a management team, [we need] to be very clear about the decisions we make, what are the principles, and be transparent about it."