According to Peter Tchir, Bitcoin price are being manipulated. The macro and fixed-income expert is not sure whether this price manipulation violates the law. The US Department of Justice recently began investigating alleged misconduct in the cryptocurrency market.
WHALES AND MINERS INFLUENCE BITCOIN PRICES
Peter Tchir, a macro economist, wrote in the Forbes column that he would be surprised if there were no tricks behind Bitcoin’s price changes, he said:
Whether the activities meet the legal definition of manipulation or can lead to a criminal indictment remains to be seen, but I’d be shocked if there wasn’t manipulation of prices occurring. Never forget Rule number two of the Three Rules of Bitcoin — ‘There are no rules!’
According to Tchir, big whales and miners can enjoy vested interests in the rise of Bitcoin prices. For miners, they want to push up prices from an economic perspective. Otherwise, mining is no longer a profitable industry.
Tchir compares it with the mainstream market and believes that the concentration of wealth will enable the big whale to “have the incentive to push Bitcoin to higher prices.”
However, an important aspect of Tchir’s analysis is missing because it ignores the motivation for falling prices. Whales can use these “shipments” by shorting Bitcoins and strengthening their monopoly on the market. They can get more Bitcoin at a lower price and then push up prices.
On May 24, it was reported that the US Department of Justice and the US Commodity Futures Trading Commission (CFTC) are seeking to investigate the price manipulation of Bitcoin. According to internal sources, fraud and money laundering transactions are the focus of the investigation. The U.S. Department of Justice believes that cryptocurrency traders are engaged in illegal trading activities and transfer the encrypted price to their desired direction.
Cryptocurrency prices fall continuously
Tchir pointed out that the lack of regulations in the market led to this so-called manipulation. This is correct. Bitcoin is currently experiencing a week-long decline and once tested the $7,000 support level.
According to Tchir, the cryptocurrency market is losing momentum due to a drop in usage due to a mix of issues. He also pointed out that the market failed to rebound after Consensus 2018, which left some optimistic hype away from the industry.
Therefore, in the process of investigating alleged price manipulation, he believes that the confidence of cryptocurrency investors is at a all-time low.
Image via Pixabay