The sentiment of the market against the dollar-linked stable currency Tether (USDT) often indicates a market value of up to 12 days before the soaring. A new study suggests that these price volatility is suspicious and may be the result of “internal manipulation of emotions”.
Augmento, a Berlin-based sentiment analysis company, analyzed 93 “emotional indicators” on Reddit – the platform often discusses USDT, the company’s perception of Reddit’s own emotions – whether it’s good news or bad news about USDT – often indicates a corresponding increase or decrease in its total market value.
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Augmento said that the long delay before the market value soared (up to 12 days) was problematic because it gave "internal people" arbitrage opportunities.
Bijan Dominik Farsijani, Chief Operating Officer of Augmento, said:
“Assume that the increase in emotional activity causes Tether to be sold, and someone can increase this emotional activity, buy at a cheaper price when the price falls, and sell when the price returns to normal.”
Tether did not respond to comments.
Tether's design means that it has to be linked to the US dollar, which can facilitate foreign traders who cannot enter the US capital market, while eliminating the need to exchange currency in real time. Although the stable currency promised to be supported by $1 per USDT at the time of launch, it was later discovered that it was actually a partial reserve system, with only 74% of the USDT having the US dollar and its equivalent support.
Tether, the US company that issued the USDT, was sued earlier this year by the Office of the Attorney General of New York (NYAG), claiming that its parent company, iFinex, had covered a $850 million financial deficit. The news has heightened concerns about so-called market manipulation – because Tether's total trading volume is usually equal to Bitcoin's trading volume, and there is a theory that Tether's surge is to push up Bitcoin's price.
According to media reports earlier, the news that prices have risen is indeed outflowing ahead of schedule. The large issuance of USDT is issued directly by Tether to its wealthy corporate clients, usually in China and Russia, in response to “rough, projected demand”.
Augmento's research seems to elaborate on this. Market sentiment, which usually involves legal and regulatory issues, often occurs between “8 and 12 days”, after which the market value of the USDT will fluctuate accordingly.
“The most interesting thing is that we found that almost all of the 93 emotions and themes we measured increased in emotional activity. This means that there will be more discussions about Tether before the market value rises.”
Of course, it can be said that before the market value rises, the emotional activity about Tether has increased. But for Augmento, the lack of a clear stimulus is questionable.
In fact, Augmento believes that this sentiment is spread through “false accounts”. Although the research company cannot confirm this, there is some circumstantial evidence. First, the leaked information seems to describe in detail the company's efforts to incite positive emotions on Reddit. Tether's sister company Bitfinex's internal records show that the company's executives are worried about how to deal with negative media reports.
Augmento describes several ways in which Tether or its investors may benefit from a surge in sentiment. The company says the easiest way is to take advantage of the arbitrage opportunities created when positive or negative emotions cause Tether to be tied to the dollar. The report states:
“The simplest operation is to spread the FUD (fear, uncertainty, suspicion) sentiment, buy the USDT at a low price after the price falls, and then sell it at a price of $1 after the price returns to normal.”
Another possibility is even more like guessing. Augmento writes that Tether's private clients are manipulating market sentiment and artificially creating low prices. When 12 days passed, Tether entered a broader circulation and prices returned to “normalization,” and customers could buy bitcoin in cheap dollars.
“There are many people who accuse Tether/Bitfinex of manipulating online discussions. Now, our data establishes the idea of how emotional manipulation can bring real returns to insiders. The link between market thinking and digital assets suggests that in a true decentralization The future, how important emotional data will be."