Bitcoin's Price is Manipulated

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Coinbase opens its crypto index fund to accredited U.S. investors

What's the Story?

  • Coinbase launched it's index fund today to accredited investors
  • Investors can invest $250,000 to $20MM
  • The index will consist of Ethereum, Bitcoin, Ethereum Classic, Litecoin and Bitcoin Cash

Why Does This Matter?

While there are other index funds in the cryptocurrency space, this is the most well-known company launching a product. The fund's management fees are in line with other products in the industry. An index fund is very much needed in the industry, but current offerings including Coinbase's are sub-par. This isn't the fault of Coinbase, but the fault of a strict regulatory environment. An index fund is meant to mimic an asset or index it tracks. An index fund such as Vanguard S&P 500 ETF tracks the S&P 500 offers daily liquidity and four basis point management fee. Coinbase's ETF provides quarterly redemptions, 200 basis point management fee, and a minimum of $250,000 investment. Many people will still buy this product because they don't want to custody cryptocurrency or deal with the hassle of setting up a Coinbase account. Pretend you are a family office and want exposure to cryptocurrency, but don't want to invest in a crypto hedge fund. Purchasing a cryptocurrency index fund is ideal despite the restrictive terms. Coinbase's index fund is a step in the right direction to helping crypto assets become an asset class but is by no means an ideal product.


Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

What's the Story?

  • A paper from the University of Texas suggests Bitcoin's price was manipulated
  • More than 50% of the increase in price was the result of manipulation
  • The manipulation was directly linked to Tether and Bitfinex

Why Does This Matter?

People have been complaining about Tether since it came out. Many don't believe that it follows 1:1 USD backing (which it claims it does) and prints Tether's to increase BTC price. It's tough to know if this is true. Tether has an incentive not to reveal it's operation because it could open itself up to government scrutiny. I haven't read the paper, but their conclusion doesn't differ from the suspicions that I have had over the years. Matt O'Dell made a good point on Twitter. He tweeted a quote from the article,"The authors of the new 66-page paper do not have emails or documents that prove that Bitfinex knew about or was responsible for price manipulation...This method is not conclusive" In other words, their research is speculative and based on inferences. In thinly traded markets, fraud is more prevalent because it's easier to manipulate the markets with less money.