Breaking the rumor of Bitcoin price manipulation, the American Institute of Economic Research published an article to explain the story behind the currency price fluctuations

The American Institute for Economic Research (AIER) and the University of Missouri are working together to study whether the price of Bitcoin is being manipulated by a small number of traders, amid a swirl of conspiracy theories and new allegations. A series of reports on the cryptocurrency by AIER show that Bitcoin's sharp price swings are linked to newsworthy events.

Debunking price manipulation rumors

The report, titled “The Link Between Bitcoin Price Fluctuations and Important News Events,” by AIER senior researcher Max Gulker, states:

While news events themselves are not necessarily the cause of Bitcoin’s price swings or daily volatility, they do provide evidence that the market is not manipulated or influenced by the actions of a small number of traders.

The head of AIER is a well-known Bitcoin enthusiast and has spoken at the North American Bitcoin Summit.

Their report states that Bitcoin does not currently conform to the efficient market theory. Based on this premise, the price of Bitcoin "should be a reflection of all publicly available information, and its price changes also imply the emergence of new information." Although Bitcoin's trading volume continues to increase and the market's interest in it has only increased, it is still a relatively small market. Small markets are easily manipulated by conspiracy groups, which is what the report refers to as "specific behavior of a small number of people."

The report looked at bitcoin price dynamics over the past two years: From 2016 to November 2017, bitcoin prices fluctuated widely on a single day. When news about bitcoin begins to get heatedly discussed, the price of the cryptocurrency fluctuates. Again, this does not mean that the market price of bitcoin is efficient or rational, but it seems to be moving in the same direction. The researchers were cautious, saying they could not establish a link between news events and price changes.

The importance of reliable information

Take JPMorgan Chase CEO Jamie Dimon as an example. His comments at the end of September last year caused a shock in the Bitcoin market, and the price of the currency fell by nearly 30% in two days. Prior to this, the price of the currency had never experienced such a sharp drop since the beginning of last year. The report said:

However, certain specific events are associated with the rise and fall of coin prices, which proves that the market is rational to some extent.

The most noteworthy of their research is the analysis of 50 major price fluctuations of the currency.

We divide potential news events into 8 categories: BS (changes in Bitcoin architecture), PO (personal opinion), GR (government regulation), OC (other currencies), NI (new investment opportunities), UI (under investigation), CS (network security) and NF (not found).

Of these categories, the researchers found that changes to Bitcoin’s architecture (such as scaling and forking) had the greatest impact on its price. Perhaps the purpose of this study is to prove that we should pay close attention to Bitcoin news and choose reliable sources of information.