Prominent blockchain industry executives have strongly criticized a recent study suggesting that a single investor likely manipulated Bitcoin's price to its record high of $20,000 in December 2017, calling the research misleading and based on fundamental misunderstandings.
The study, conducted by John Griffin and Amin Shams from the University of Texas and Ohio State University, claimed that Bitcoin's surge to its all-time high in 2017 wasn't driven by thousands of investors, but rather by one massive "whale." Griffin stated:
"Our results suggest instead of thousands of investors moving the price of Bitcoin, it's just one huge one. Years from now, people will be amazed to see investors handed over billions to people they didn't know and who faced little accountability."
However, numerous strategists and executives within the cryptocurrency sector have argued that the data has been misinterpreted, emphasizing that a single custodian is not equivalent to a single individual.
Ari Paul, co-founder at BlockTower Capital, explained that the logic in claiming Bitcoin's 2017 bull run was artificial because most trading volume came from one wallet is like saying traditional market assets are manipulated because most of their volumes come from custodians.
"Their 'research' is based on a fundamental misunderstanding of how market assets work. It's like saying that GLD (gold ETF) is traded mostly by one person because it has a single custodian and a single entity handling creations and redemptions," said Paul.
2/ in straightforward terms: both GLD (and all ETFs) and tether have a single entity through which all movement of the asset flows. Investors deposit cash and that entity then either buys gold and distributes the ETF, or mints tether and distributes it which is often then used to by BTC.
— Ari Paul ⛓️ (@AriDavidPaul) Nov 4, 2019
Speaking to CryptoSlate in an exclusive interview, Blockstream Chief Strategy Officer Samson Mow stated that the premise of the paper itself is "ridiculous" and that it's extremely unlikely for a single whale to manipulate the price of bitcoin. Mow said:
"The entire premise of Griffin and Shams' academic paper is ridiculous and the latest update from these 'academics' is equally laughable. If they really believe a single whale could manipulate the price of Bitcoin and hundreds of other assets, then they probably also believe Santa Claus delivers presents to every child in the world by flying reindeer ride."
While the market capitalization of Bitcoin remains lower than traditional safe havens like gold, it has maintained relatively high liquidity and daily volume quite consistently throughout the past several years.
With BitMEX, the largest margin trading platform for Bitcoin, seeing over $1 billion in open interest and over $10 billion in daily volume on peak days, and other major exchanges including Kraken, Bitfinex, Bitstamp, Coinbase, Binance, and Huobi experiencing high volumes, it's becoming increasingly difficult for a single individual to manipulate the dominant cryptocurrency.
With the emergence of regulated and traditional investment vehicles, exchanges, and futures markets, the infrastructure supporting the Bitcoin market has strengthened since early 2018.
CME, Bakkt, and a recent wave of regional cryptocurrency exchanges as well as margin trading platforms have started to shift the focus of the market from a select few exchanges to thousands, creating a more difficult environment for individuals, even for whales, to attempt to manipulate prices.
