We now know there is strong evidence that one party manipulated the price of bitcoin to nearly $20,000 two years ago. So, the question today is: Who is manipulating it now?
Earlier this week, two university professors — one of whom is a specialist in forensic accounting — published a study in the Journal of Finance alleging that one person, or group, was behind the bitcoin spiking to an all-time high price of $20,000 in late 2017.
Professors John Griffin of the University of Texas and Amin Shams of Ohio State said the manipulation was accomplished by using another cryptocurrency called Bitfinex. The study suggested that the people behind Bitfinex knew about the manipulation, although executives there have said the professors’ findings are hooey.
They are worthless, I’ve been arguing, because they are backed by nothing but vivid imaginations, greed and people’s willingness to be gullible.
It’s the same as every other scam in the history of mankind.
The fact that the Federal Reserve is pouring too much money into the economy is also to blame.
All that money needs somewhere to go, and cons thrive on desperate, hungry investors.
The only way manipulators can maintain confidence is to hold onto an attractive enough price and make people believe bitcoin will be worth more in the future.
And the only way manipulators can be assured of that is by supporting the con by purchasing bitcoin.
Part of the attraction of bitcoin and other cryptocurrencies was the fact that profits seemed to have been beyond the reach of the watchful IRS.
That misconception ended a couple months ago when, as I first reported, the IRS started sending letters out to bitcoin traders demanding tax payment — or else.
That should have been a big dagger in the heart of bitcoin.
But it couldn’t kill the beast, probably because folks with strong vested interests were willing to put more money into the confidence game to keep prices up.
At one point last year, bitcoin dropped from that $20,000 high to just $3,400.
It has since recovered to around $9,300 as of Wednesday.
Aside from the fact that crooks can make a killing on con’s like this, there are others who benefit.
US intelligence services have long been looking at criminals and terrorists who can use bitcoins and other cryptos to move money surreptitiously around the world.
Bitcoin is also great for rogue countries that are trying to get around trade embargoes.
Typically, I get a lot of nasty, threatening e-mails from defenders of bitcoin when I write columns like this one.
But it’s funny, those e-mails appear to have stopped once crypto traders realized they were leaving a trail with me that the IRS could later follow.
Maybe one of those e-mail writers is the current manipulator. Please write to me if you are.