Since the start of the new year, the value of Bitcoin has dropped by almost 50%, a dramatic plunge that has seen the price of the overall digital currency market plummet by over £30 billion.
Bitcoin’s value had a meteoric rise at the tail-end of 2017 prompting unparalleled investment in the alternative currency, as well as in numerous of its competitors, as well as the production and introduction of a whole swathe of new altcoins into the market. Peaking at $20,000 per coin in the last half of December, the sudden rise and equally unexpected fall in Bitcoin’s fortunes has prompted many financial experts to declare it as symptomatic of a cryptocurrency bubble.
Now, something even more sinister is being mooted, with some claiming that the stratospheric prices reached last year might actually have been artificially inflated by the actions of a cryptocurrency exchange, Bitfinex.
The exchange has been accused of buying large quantities of bitcoins using another digital currency (Tether – an affiliate of Bitfinex), thus propping up the value of Bitcoin (and their own stocks of same) artificially.
The US Commodity Futures Trading Commission (CFTC) is launching a probe into Bitfinex and its actions.
Industry professionals, including Joey Krug, investment officer for Pantera Capital have stated that the accusation is a serious one, and cause for concern, since the same pattern appears to occur whenever Bitcoin sees a significant rise.
The major concern is that the recent rallies in the value of the popular Bitcoin might not be real after all, but merely evidence of further manipulation of the market. If this is the case, then it is entirely possible that public trust in the altcoin could be damaged irreparably forever.
Bitfinex and Tether refused to make a comment on this particular investigation.
Image Source: Pixabay