Bitcoin fell 2% on Wednesday after a new academic paper was published claiming bitcoin's price run to December last year was driven by manipulation.

The University of Texas paper alleges that exchange Bitfinex may have used Tether, a cryptocurrency it is closely linked to, to support the price.

The price of bitcoin fell against the dollar on Wednesday after an academic paper claimed the cryptocurrency's 2017 bull run was caused by market manipulation at a major exchange — allegations denied by the CEO.

Academics at the University of Texas on Wednesday published a paper analysing whether cryptocurrency Tether "influences Bitcoin and other cryptocurrency prices during the recent boom."

The academics concluded that the price patterns are "most consistent with the supply-based hypothesis where Tether is used to provide price support and manipulate cryptocurrency prices."

Tether is a cryptocurrency supposedly backed by the US dollar one-for-one, offering the stability of the currency but the flexibility and functionality of cryptocurrency.

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