Bitcoin’s record price surge of 2017 ‘was caused by a single person’ – The Independent

Bitcoin's dramatic price surge in 2017 that saw it reach record highs was caused by a single cryptocurrency trader, according to a new study.

University of Texas Professor John Griffin and Ohio State Assistant Professor Amin Shams claim their latest research of bitcoin transactions between March 2017 and March 2018 shows that bitcoin was manipulatedthrough large-volume trades that drove the price up.

"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," the academics wrote in a paper, which wasshared with Bloomberg ahead of its publication in the Journal of Finance.

Sharing the full story, not just the headlines

The price of bitcoin is notoriously volatile, susceptible to reacting strongly to geopolitical events andregulatory rulings concerning cryptocurrency.

In the wake of its record price high in 2017, which saw it reach close to $20,000, bitcoin experienced a series of crashes throughout 2018that saw its value eventually drop below $4,000.

On 3 January, 2009, the genesis block of bitcoin appeared. It came less than a year after the pseudonymous creator Satoshi Nakamoto detailed the cryptocurrency in a paper titled 'Bitcoin: A peer-to-Peer Electronic Cash System'

Reuters

On 22 May, 2010, the first ever real-world bitcoin transaction took place. Lazlo Hanyecz bought two pizzas for 10,000 bitcoins the equivalent of $90 million at today's prices

Lazlo Hanyecz

Bitcoin soon gained notoriety for its use on the dark web. The Silk Road marketplace, established in 2011, was the first of hundreds of sites to offer illegal drugs and services in exchange for bitcoin

On 29 October, 2013, the first ever bitcoin ATM was installed in a coffee shop in Vancouver, Canada. The machine allowed people to exchange bitcoins for cash

REUTERS/Dimitris Michalakis

The world's biggest bitcoin exchange, MtGox, filed for bankruptcy in February 2014 after losing almost 750,000 of its customers bitcoins. At the time, this was around 7 per cent of all bitcoins and the market inevitably crashed

Getty Images

In 2015, Australian police raided the home of Craig Wright after the entrepreneur claimed he was Satoshi Nakamoto. He later rescinded the claim

Getty Images

On 1 August, 2017, an unresolvable dispute within the bitcoin community saw the network split. The fork of bitcoin's underlying blockchain technology spawned a new cryptocurrency: Bitcoin cash

REUTERS

Towards the end of 2017, the price of bitcoin surged to almost $20,000. This represented a 1,300 per cent increase from its price at the start of the year

Reuters

On 3 January, 2009, the genesis block of bitcoin appeared. It came less than a year after the pseudonymous creator Satoshi Nakamoto detailed the cryptocurrency in a paper titled 'Bitcoin: A peer-to-Peer Electronic Cash System'

Reuters

On 22 May, 2010, the first ever real-world bitcoin transaction took place. Lazlo Hanyecz bought two pizzas for 10,000 bitcoins the equivalent of $90 million at today's prices

Lazlo Hanyecz

Bitcoin soon gained notoriety for its use on the dark web. The Silk Road marketplace, established in 2011, was the first of hundreds of sites to offer illegal drugs and services in exchange for bitcoin

On 29 October, 2013, the first ever bitcoin ATM was installed in a coffee shop in Vancouver, Canada. The machine allowed people to exchange bitcoins for cash

REUTERS/Dimitris Michalakis

The world's biggest bitcoin exchange, MtGox, filed for bankruptcy in February 2014 after losing almost 750,000 of its customers bitcoins. At the time, this was around 7 per cent of all bitcoins and the market inevitably crashed

Getty Images

In 2015, Australian police raided the home of Craig Wright after the entrepreneur claimed he was Satoshi Nakamoto. He later rescinded the claim

Getty Images

On 1 August, 2017, an unresolvable dispute within the bitcoin community saw the network split. The fork of bitcoin's underlying blockchain technology spawned a new cryptocurrency: Bitcoin cash

REUTERS

Towards the end of 2017, the price of bitcoin surged to almost $20,000. This represented a 1,300 per cent increase from its price at the start of the year

Reuters

This year bitcoin's price has risen steadily and it is currently trading at around $9,300, having briefly reached above $12,000 in June. It remains prone to sudden swings in price, which some attribute to market manipulation by so-called bitcoin whales that are able to influence the price through a single trade.

A flash crash that wiped $1,000 from bitcoin's value in less than an hour was triggered by the sale of 5,000 bitcoins - worth around $40 million at the time of the trade.

It remains a long way off its 2017 highs, though some market analysts believe its upward trajectory will likely continue in the long term.

Changpeng Zhao,CEO of the world's largest cryptocurrency exchange Binance,recently predicted bitcoin will reach $16,000 "soon-ish".

Study suggests bitcoin's volatile price history was fuelled by so-called cryptocurrency whales (CoinMarketCap)

Other cryptocurrency experts claim that despite the historical turmoil, bitcoin will continue to rise in price and could eventually recover to 2017 levels.

Some advocates even believe bitcoin is still a long way from reaching its full price potential, with figures like John McAfee and Tim Draper arguing that its scarcity means it could grow more than 25-fold in value over the next few years.

$250,000 means that bitcoin would then have about a 5 per cent market share of the currency world and I think that may be understating the power of bitcoin, Mr Draper said in September.

Mr McAfee, who founded the eponymous antivirus firm, is even more bullish in his forecast, having recently stood by his notorious predictionthat bitcoin would hit $1 million by the end of 2020.

A website set up to track his prediction shows that it is currently more than 90 per cent behind being on track.

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Bitcoin's record price surge of 2017 'was caused by a single person' - The Independent