Working Paper: CEPR ID: DP12061
Authors: Neil Gandal; Tali Oberman; Tyler Moore; JT Hamrick
Abstract: We identify and analyze the impact of suspicious trading activity on the Mt. Gox Bitcoin currency exchange between February and November 2013. We discuss two distinct periods in which approximately 600,000 bitcoins (BTC) valued at $188 millionwere acquired by agents who likely did not pay for them. During both periods, the USD-BTC exchange rate rose by an average of four percent on days when suspicious trades took place. On days without suspicious activity, the exchange rate remainedat. Based on rigorous analysis with extensive robustness checks, we conclude 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.
Keywords: Bitcoin; Cryptocurrencies; Price Manipulation
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| suspicious trading activity (G14) | trading volume and price spikes across the Bitcoin ecosystem (E32) |
| suspicious trading activity (G14) | price increase from $150 to over $1,000 (D49) |
| suspicious purchases and trading volume (G14) | price increases (E30) |
| suspicious trading activity (Markus and Willy bots) (G14) | daily price changes of Bitcoin (E39) |
| suspicious trading activity (G14) | USD/BTC exchange rate (F31) |