Supply and demand are not the only factors that determine crypto valuations, according to an in-depth analysis of trades on Bitfinex and other trading platforms by a University of Texas professor.

The platform and technologies integral to its functioning are so strongly correlated with market fluctuations as to constitute a factor in and of themselves, according to the study, “Is Bitcoin Really Un-Tethered?”. The source of trading venue seems to matter,John Griffin, tells ThirtyK. Griffin, a professor of finance, authored the paper with Amin Shams.

The implication, adds Griffin, is that the form of trading platform can leave a currency open to gaming.

By analyzing the flow of funds in millions of transactions, Griffin and Shams found evidence that tether, in effect, insulated bitcoin prices during downturns, but not necessarily vice versa.

Griffin and Shams found that the exchange Bitfinex may have generated artificial demand for bitcoin (BTC) and inflated prices for the cryptocurrency last year by using the virtual coin tether (USDT) to buy bitcoin. The researchers found that when the amount of tether in the market increased, cryptocurrency prices rose. The price of ether (ETH) and Zcash (ZEC) increased even faster than bitcoin after influxes of tether.

The researchers likened these price changes to the inflationary effect of printing additional money.

CEO JL van der Velde of the Hong Kong-based Bitfinex told ThirtyK that neither Bitfinex or tether “is, or has ever, engaged in any sort of market or price manipulation. Tether issuances cannot be used to prop up the price of bitcoin or any other coin/token on Bitfinex.”

Bitcoin fell in value by more than a percentage point on Wednesday.

Anchoring Context

Griffin is known for his research identifying patterns that indicate fraudulent behavior in financial markets.

In his paper, Griffin detected a dynamic intrinsic to the use of tether, a cryptocurrency that claims a one-to-one valuation with the U.S. dollar. The net effect is that tether appears to both do what it is supposed to stabilize transactions by providing an anchoring context and also create a new way to manipulate cryptocurrency values.

Griffin and Shams found that tether itself can be a tool for cross-exchange pricing arbitrageor, conversely, demand for tether can be created by exchanges that require it as a the fiat currency.

In other words, by requiring the use of a secondary currency, the exchanges (Bitfinex and Poloniex were the two primary exchanges in the study) also create the opportunity to manipulate demand by forcing traders to use the currency. Artificial demand affects valuations.

Forcing the Flow

By analyzing the flow of funds in millions of transactions, Griffin and Shams found evidence that tether, in effect, insulated bitcoin prices during downturns, but not necessarily vice versa.

The researchers concluded that, consistent with high-profile market manipulations in the past, bad actors can seed price distortions and channel capital for their own purposes. They said thatcapital market surveillance and monitoring may be necessary to obtain a market that is truly free.

In January, the U.S. Commodities Futures Trading Commission served subpoenas to both Bitfinex and Tether, though no updates or action have been subsequently announced. In May, the CFTC said that one of its priorities for cryptocurrency and exchanges will be enhanced market surveillance.