Research conducted by the University of California Berkeley’s Haas Blockchain Initiative has found that stablecoin issuances do not push up the price of bitcoin or of other cryptocurrencies.

In a report, Richard Lyons, U.C. Berkley’s chief innovation and entrepreneurship officer, and Garnish Viswanath-Natraj, assistant professor of finance at the Warwick Business School, revealed they found stablecoins are instead a tool for investors to react to market movements, and aren’t behind price rises or collapses.

The analysts the researchers conducted in their study went into trading data, and shows flows are consistent with investors using stablecoins as a store of value during risky periods, or when cryptoassets prices plunge. The researchers also found “strong evidence” of another catalyst for flows from issuer treasuries to secondary markets: arbitrage trading. These flows occur when stablecoins deviate from their pegs.

The study directly contradicts research published by John Griffins of the University of Texas at Austin and Amin Shams of the Ohio State University, which in June 2018 suggested Tether’s USDt stablecoin was being used to manipulate the price of bitcoin, adding fuel to critics claiming Tether and Bitfinex – sharing management – manipulated crypto markets to help BTC hit its near $20,000 all-time high.

Instead, Lyons and Viswanath-Natraj found “no systematic evidence that stablecoin issuance affects cryptocurrency prices,” writing:

We find no systematic evidence that stablecoin issuance affects cryptocurrency prices. Rather, our evidence supports alternative views; namely, that stablecoin issuance endogenously responds to deviations of the secondary market rate from the pegged rate, and stablecoins consistently perform a safe-haven role in the digital economy.

Tether and Bitfinex, it’s worth noting, have been facing a class-action lawsuit alleging they ““monopolized and conspired to monopolize the bitcoin market” via stablecoin issuance, among other things.” In the crypto space there are over $9 billion worth of stablecoins circulating, out of which $7 billion were issued by Tether.

Featured image via Pixabay.