According to Peter Tchir, there is an ongoing manipulation of bitcoin price. What the macro and fixed income expert isn’t sure of is whether such price manipulations are against the law. The DOJ recently began investigating suspected trading malpractices in the cryptocurrency market.
Whales and Miners Influence Bitcoin Prices
Writing in an op-ed for Forbes, macroeconomist Pter Tchir states that he’d be surprised if there weren’t any shenanigans going on with the way Bitcoin prices move, saying:
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, whales and miners have vested interests in higher Bitcoin prices. For miners, it makes sense for them to want to push prices higher from an economic perspective. Otherwise, mining no longer becomes a profitable enterprise.
Tchir drew comparisons with the mainstream market arguing that wealth concentration gives whales “the incentive to push prices higher.”
There is, however, a significant aspect missing from Tchir’s analysis as it ignores the incentives for price declines. Whales can take advantage of these selloffs by shorting bitcoin and strengthen their monopoly of the market. They can acquire more bitcoins at lower prices before driving prices higher again.
On May 24, reports emerged that the DOJ and the CFTC were looking to probe suspected bitcoin price manipulation. According to inside sources, spoofing and wash trading are the focus of the investigation. The DOJ believes traders are engaging in illicit trading activities to move crypto prices in their desired direction.
Continuous Crypto Price Decline
Tchir is correct in pointing out that the lack of regulations in the market make it possible for such alleged manipulations to occur. Bitcoin is currently experiencing a week-long decline that seen the number one crypto bouncing of support at $7,000 USD.
According to Tchir, the crypto market is losing steam due to an amalgam of problems that have slowed down adoption rate. He also pointed out that the failure of the market to rally after Consensus has taken some of the bullish hype away from the industry.
Thus, as investigations probe suspected price manipulation, Tchir believes that crypto investor confidence is at an all-time low.
Do you think that there is a manipulation of bitcoin prices? Keep the conversation going in the comment section below.
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