According to a recent report by Bloomberg, huge trades move prices about the same as small ones, disregarding the normal rules of economics when it comes to the coin Tether. Bloomberg’s article mentions:
“According to a review of Kraken’s public order book—a pattern that experts on market manipulation view as a red flag. The mystery is bracketed by another quirk: Oddly specific order sizes—many going out to five decimal points, with some repeating frequently. Another red flag.”
Bloomberg News analyzed this market manipulation with the help of New York University’s Professor Rosa Abrantes-Metz and former Federal Reserve Bank examiner Mark Williams. They pulled in a sample of more than 56,000 trades that were placed on the exchange between May 1st and June 22nd and submitted the same the NYU’s Professor.
“Both agreed that they’d never seen a market behave like Kraken, where large Tether orders fail to sway prices much.”
John Griffin, University of Texas’ Professor, earlier this month, produced a research paper which highlights Tether as being primarily used by Bitfinex, to purchase Bitcoin tokens from two other exchanges and most importantly did this only after periods of Bitcoin price declines.
At Kraken, Bloomberg reports that the third-most-common trade during the period was for 13,076.389 Tether tokens. They stated:
“Many other orders go out to five decimal places, numbers like 34.08652. Abrantes-Metz and Williams suspect that such numbers could be signals to cheaters’ automated trading programs.”
The possible explanation for this directs towards the software, which would see for orders with a “unique size”, and trade against that. They mention this as “wash trading” [refers to buying shares through one broker and selling the shares through another broker], something which is banned in “regulated markets” as it can give a false impression of market supply and demand.
They also mention that there is no direct evidence that Kraken itself is involved in any manipulation that they have identified. Kraken’s Chief of Staff, Allan Stevo stated after Bloomberg’s report:
“Nothing looks out of place to us in our publicly available trade data feed. Not been able to confirm that the data set you sent to us is accurate.”
Bloomberg had the statistics of May 7th which shows that in the span of 2 minutes there were 31 back-to-back trades to buy the currency, factoring a total of 159,487 Tethers. But Tether’s price didn’t shift from 1, despite the unyielding purchases. There were other similar statistics that were explained where Tether’s price was unchanged despite the fluctuations. Dave Weisberger, Co-founder/CEO of CoinRoutes reacting to these statistics mentions:
“No human would enter that order. It doesn’t make sense. Is there manipulation? I don’t know, but I know they’d be digging into it. Institutional investors, before they commit their capital, want to see the market is fair.”