Topic: Is Bitcoin Really Un-Tethered?

Speaker: John Griffin, Professor of Finance, University of Texas at Austin

Date: April 3rd (Wednesday)

Time: 10:00-11:30am

Location: Building 4 Room 102

Language: English

Abstract:

This paper investigates whether Tether, a digital currency pegged to U.S. dollars, influences Bitcoin and other cryptocurrency prices during the recent boom. Using algorithms to analyze the blockchain data, we find that purchases with Tether are timed following market downturns and result in sizable increases in Bitcoin prices. Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in Bitcoin and 64% of other top cryptocurrencies. The flow clusters below round prices, induces asymmetric auto-correlations in Bitcoin, and suggests incomplete Tether backing before month-ends. These patterns cannot be explained by investor demand proxies but are most consistent with the supply-based hypothesis where Tether is used to provide price support and manipulate cryptocurrency prices.

About the speaker:

Professor John M. Griffin is currently the James A. Elkins Centennial Chair in Finance at the University of Texas, McCombs School of Business. He has also served on the faculty at Arizona State University, Yale University, Hong Kong University of Science and Technology, and Harvard Business School. His research focuses on understanding the role that conflicts of interest and misreporting played in the financial crisis. A main field is forensic finance, or understanding the role of anything that is potentially illegal, illicit or immoral in financial markets. His research has been extensively published and cited in the top finance journals and featured in over 600 media outlets including Bloomberg, Wall Street Journal, New York Times, and Financial Times. Recent areas of study include cryptocurrencies and market manipulation. His expertise is in structured finance, credit ratings, international finance, and institutional investments with topics of papers including: the financial crisis, manipulation, mortgage misreporting, credit ratings, insider trading, investment banking, cryptocurrencies, corruption, trading behavior, and international finance.