Bitcoin’s huge price surge of 2017 was caused by one person manipulating the market, according to a new academic paper.

The paper, written by University of Texas professor John Griffin and Ohio State University’s Amim Shams, claims that a lone actor was able to cause Bitcoin’s price to skyrocket once it would dip below a certain threshold through the purchasing of another cryptocurrency, Tether, on the Bitfinex exchange.

The price of Bitcoin rose throughout 2017, peaking at $US20,000, with its total market value climbing to $US326 billion. But the new paper claims that this market surge wasn't natural.

According to the academics, this was due to a “single large account holder” on Bitfinex.

The researcher’s theory focused on Tether, a supposedly stable-coin meant to hold its value to $US1.

But the academics claim that these tokens are created without the dollars to back them, and are then used to purchase Bitcoin, which drives up its price.

“Our results suggest instead of thousands of investors moving the price of Bitcoin, it’s just one large one,” Griffin told Bloomberg.

“Years from now, people will be surprised to learn investors handed over billions to people they didn’t know and who faced little oversight.”

The researchers analysed Tether and Bitcoin transactions between March 2017 and March 2018, and found that Bitcoin purchases on the Bitfinex platform increased whenever Bitcoin’s value fell below a certain point.

“This pattern is only present in periods following printing of Tether, driven by a single large account holder and not observed by other exchanges,” Griffin said.

“Simulations show that these patterns are highly unlikely to be due to chance.

“This one large player or entity either exhibited clairvoyant market timing or exerted an extremely large price impact on Bitcoin that is not observed in aggregate flows from other smaller traders.”

Tether and Bitfinex are owned by the same people.

Tether’s general counsel Stuart Hoegner outright rejected the report’s findings, labelling it “foundationally flawed” and based on an insufficient data set.

“This is a transparent attempt to use the semblance of academia for a mercenary money grab,” Hoegner said. “Updates or not, the paper lacks academic rigor.”

Tether and Bitfinex are highly controversial entities, with the crypto exchange accused by the New York Attorney General of using funds from Tether to cover up $US850 million in funds missing from mid-2018.

The academic paper’s “one whale theory” has also been rejected by LongHash researchers, who have claimed that it isn’t possible.

The theory that Tethers are created without the dollars to back them up is a “circuitous hypothesis related to how cash management works for Tether auditing”, the researchers said.

“It is widely known that whales can move short-term crypto prices due to exchange slippage, so this part of the paper does not seem to contribute to its main thesis,” the LongHash researchers said.

“Overall, the paper does a very poor job of convincing us that Tether is manipulating the market.”

While the price of Bitcoin is yet to return to even close to the heights it reached in 2017, reclusive entrepreneur John McAfee has stood by his prediction that the price will soar to $US1 million by the end of next year.

McAfee told Information Age that this is based on “pure numbers”.

“We have a supply that’s diminishing rapidly and a demand which is growing rapidly, and I figure in the middle of next year it’s going to break and people will go, ‘oh my god there’s no more bitcoins’,” he said.