BITCOIN investors have been given some shock price news by experts analysing the cryptocurrency.
Bitcoin price news continues to be disheartening for investors, with the cryptocurrency once again dropping in value today.
The value of Bitcoin fell below the $8,000 marker today for the first time since November 24 last year.
It’s a far cry from December 2017, when Bitcoin price records were broken as it reached almost as high as $20,000.
Despite the fluctuating Bitcoin price, experts are predicting that the cryptocurrency could hit the $50,000 marker this year.
Amid these highs and lows, a shock study has emerged which has given an explanation for one massive price rise Bitcoin experienced.
Back in 2013, Bitcoin rose from $150 to $1,000 within the space of just two months.
It was a landmark moment for the cryptocurrency - and researchers now believe this price surge was sparked by one person.
Their paper, ‘Price Manipulation in the Bitcoin Ecosystem’, explains that one bad actor was likely behind the huge Bitcoin price surge.
In the study researchers Neil Gandal, JT Hamrick, Tyler Moore, and Tali Oberman explained how suspicious activity impacted Bitcoin’s price in 2013.
The researchers wrote: “This paper identifies and analyses the impact of suspicious trading activity on the Mt. Gox Bitcoin currency exchange, in which approximately 600,000 bitcoins (BTC) valued at $188 million were fraudulently acquired.
“During both periods, the USD-BTC exchange rate rose by an average of four percent on days when suspicious trades took place, compared to a slight decline on days without suspicious activity.
“Based on rigorous analysis with extensive robustness checks, the paper demonstrates that the suspicious trading activity likely caused the unprecedented spike in the USD-BTC exchange rate in late 2013, when the rate jumped from around $150 to more than $1,000 in two months.”
The researchers are from Tandy School of Computer Science at The University of Tulsa and the Berglas School of Economics at Tel Aviv University.
They found that a majority of the Bitcoin price manipulation was caused by two bots they named as Markus and Willy.
Markus and Willy seemed to be performing legitimate Bitcoin trades, but it turned out they did not actually own the Bitcoin they were using.
TechCrunch reported that during the Mt. Gox hack a number of bots created fake trades and made off with millions as they manipulated the Bitcoin price.
The paper added: “The publicly reported trading volume at Mt. Gox included the fraudulent transactions, thereby signalling to the market that heavy trading activity was taking place.
“Indeed, the paper later shows that even if the fraudulent activity is set aside, average trading volume on all major exchanges trading bitcoins and USD was much higher on days the bots were active.
“The associated increase in “non-bot” trading was, of course, profitable for Mt. Gox, since it collected transaction fees.
“But the Willy Bot likely served another purpose as well.
“A theory, initially espoused in a Reddit post shortly after Mt. Gox’s collapse (Anonymous, 2014b), is that hackers stole a huge number (approximately 650,000) of bitcoins from Mt. Gox in June 2011 and that the exchange owner Mark Karpales took extraordinary steps to cover up the loss for several years.”
The researchers added: “As mainstream finance invests in cryptocurrency assets and as countries take steps toward legalising Bitcoin as a payment system (as Japan did in April 2017), it is important to understand how susceptible cryptocurrency markets are to manipulation.
“Our study provides a first examination.”