IDEAS home Printed from https://ideas.repec.org/p/arx/papers/1902.01941.html
   My bibliography  Save this paper

Market Manipulation of Bitcoin: Evidence from Mining the Mt. Gox Transaction Network

Author

Listed:
  • Weili Chen
  • Jun Wu
  • Zibin Zheng
  • Chuan Chen
  • Yuren Zhou

Abstract

The cryptocurrency market is a very huge market without effective supervision. It is of great importance for investors and regulators to recognize whether there are market manipulation and its manipulation patterns. This paper proposes an approach to mine the transaction networks of exchanges for answering this question.By taking the leaked transaction history of Mt. Gox Bitcoin exchange as a sample,we first divide the accounts into three categories according to its characteristic and then construct the transaction history into three graphs. Many observations and findings are obtained via analyzing the constructed graphs. To evaluate the influence of the accounts' transaction behavior on the Bitcoin exchange price,the graphs are reconstructed into series and reshaped as matrices. By using singular value decomposition (SVD) on the matrices, we identify many base networks which have a great correlation with the price fluctuation. When further analyzing the most important accounts in the base networks, plenty of market manipulation patterns are found. According to these findings, we conclude that there was serious market manipulation in Mt. Gox exchange and the cryptocurrency market must strengthen the supervision.

Suggested Citation

  • Weili Chen & Jun Wu & Zibin Zheng & Chuan Chen & Yuren Zhou, 2019. "Market Manipulation of Bitcoin: Evidence from Mining the Mt. Gox Transaction Network," Papers 1902.01941, arXiv.org.
  • Handle: RePEc:arx:papers:1902.01941
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/1902.01941
    File Function: Latest version
    Download Restriction: no

    References listed on IDEAS

    as
    1. Pavel Ciaian & Miroslava Rajcaniova & d’Artis Kancs, 2016. "The economics of BitCoin price formation," Applied Economics, Taylor & Francis Journals, vol. 48(19), pages 1799-1815, April.
    2. Gandal, Neil & Hamrick, JT & Moore, Tyler & Oberman, Tali, 2018. "Price manipulation in the Bitcoin ecosystem," Journal of Monetary Economics, Elsevier, vol. 95(C), pages 86-96.
    3. Jamal Bouoiyour & Refk Selmi, 2015. "What Does Bitcoin Look Like?," Annals of Economics and Finance, Society for AEF, vol. 16(2), pages 449-492, November.
    4. Gillespie, Colin S., 2015. "Fitting Heavy Tailed Distributions: The poweRlaw Package," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 64(i02).
    5. Jamal Bouoiyour & Refk Selmi, 2015. "What Does Bitcoin Look Like?," Post-Print hal-01879683, HAL.
    Full references (including those not matched with items on IDEAS)

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:1902.01941. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (arXiv administrators). General contact details of provider: http://arxiv.org/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.