Is Tron's Price Manipulation

Today in the Journal of Monetary Economics an article was published called Price Manipulation in the Bitcoin Ecosystem. The article claims that the price of Bitcoin rose from $150 to $1,000 due to the actions of one trader. To most in the cryptocurrency world, this isn't surprising. The markets, especially, in 2014 were thinly traded, information asymmetry was (and still is) widespread, and volume wasn't (and still isn’t) shared across exchanges. I believe volume has significantly increased for tokens such as Bitcoin and Ethereum, but wanted to take a look at smaller tokens such as Tron.

For publicly traded equities, you can look at who owns large stakes of a stock through public disclosures. Hedge funds and mutual funds are required to share at least quarterly their holdings. In the cryptocurrency space, you can look at blockchain explorers to find out who owns how much of a specific cryptocurrency. I went on Etherscan and looked up Tron.

Tron Price Manipulation

The top 5 Tron holders account for more than 58% of all issued supply of Tron. The top 25 holders own more than 75% of Tron. This really makes you wonder about the true supply of Tron that is trading. Are many of these accounts long-time holders? If they are, the supply that is being traded on exchanges is much smaller than what is in circulation. As such, a small account of demand (or falsification of demand) can increase the price. It's also easy for large holders to manipulate prices by creating large amounts of volume that make it appear that there is a large interest in trading Tron. This will typically lead to people following the manipulator(s) lead and buying Tron. It's very suspicious that a cryptocurrency which primarily trades on one exchange went from sub $200MM volume in trading to over $4B in 3 weeks.

The third largest account holder of Tron is 0xb287a379e6caca6732e50b88d23c290aa990a892. This account holds a bit under 7% of the issued supply of Tron. It constantly moves Tron tokens to a new public address and then the new public addresses are moving their portion of Tron tokens received to Binance. The token transfers are usually at least $25,000. Some are over $1MM. Why don't you just move the tokens directly to Binance. Why create 100's of new public keys to do this? A new transaction is occuring roughly every few minutes.

Could this be coincidental? It's possible, but I believe that the price of Tron is being manipulated through large holders creating "fake volume" which leads to more demand combined with a small amount of supply on exchanges. This accounts for the large increase in price for Tron over the past couple weeks.

Learn about investing in Bitcoin with a Beginner's Guide to Investing in Cryptocurrency

~ Ari Lewis | Follow Ari on Twitter @amlewis4

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