Bitcoin buying will be like 'trading turds'

Bitcoin’s remarkable run last year may have been smoke in addition to mirrors.

Tether, another digital currency tied to the US dollar, was used to artificially inflate bitcoin prices, according a study released Wednesday by the University of Texas.

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John Griffin, a finance professor at the university, in addition to graduate student Amin Shams analyzed blockchain purchases in addition to discovered in which major Tether buys were timed to follow market downturns in addition to helped stabilize bitcoin’s floor.

“These patterns cannot be explained by investor demand,” they said inside the study.

Griffin in addition to Shams have also recently found in which the VIX, Wall Street’s volatility index, was being manipulated.

A lawsuit filed in March cited their research to claim traders manipulated the value of VIX options in addition to futures by creating bets on the S&P 500 before VIX settlement auctions.

The cost of bitcoin dropped 1% on Wednesday to around $6,485, according to CoinDesk. Bitcoin’s slump drove down some other cryptocurrencies, including ripple, litecoin, in addition to ethereum.

Bitcoin continued reeling days after a massive hack in South Korea. On Monday, South Korea’s Coinrail said in which the idea had been hacked in addition to about 30% of its virtual currencies were stolen. South Korea will be one of the biggest markets for crypto trading inside the globe.

Related: Crypto hacks: will be your bitcoin investment safe?

Over the past month, bitcoin has lost 25% of its value.

Retail buyers flooded the market late last year, lifting bitcoin to above $19,000 in December. yet the idea has fallen in recent months due to fears of stricter regulations in addition to an absence of institutional investors coming in, said Jason Yanowitz, co-founder of blockchain advisory firm BlockWorks Group.

—CNNMoney’s Daniel Shane contributed to in which story.

CNNMoney (completely new York) First published June 13, 2018: 10:59 AM ET