The U.S. dollar-pegged tether has been used to support bitcoin’s price during market downturns, a new study published by University of Texas at Austin professors.

John Griffin and Amin Shams, of the University of Texas at Austin’s Department of Finance, published a study Wednesday linking the stablecoin with bitcoin’s prices during the 2017 price increases. The published study states that the researchers used “algorithms to analyze the blockchain data, we find that purchases with tether are timed following market downturns and result in sizable increases in bitcoin prices.

This produced a clear link between the printing of new tether tokens and bitcoin’s price increases following bear runs, the study claims, stating:

“By mapping the blockchains of bitcoin and tether, we are able to establish that entities associated with the Bitfinex exchange use tether to purchase bitcoin when prices are falling. Such price supporting activities are successful, as Bitcoin prices rise following the periods of intervention. These effects are present only after negative returns and periods following the printing of tether.”

However, the two notably discovered that it does not take a large amount of tether to prop bitcoin’s price – “even less than 1 percent of extreme exchange of tether for bitcoin has substantial aggregate price effects,” the study said.

The algorithms the two developed were able to “cluster groups of related bitcoin wallets,” according to the study. This allowed the researchers to map how tether was distributed, and how it impacted bitcoin prices. The study explains that “tether is created, moved to Bitfinex, and then slowly moved out to other crypto-exchanges, mainly Poloniex and Bittrex.”

It continued on to note that generally, the token is not redeemed by the issuer, “and the major exchange where tether can be exchanged for USD, Kraken, accounts for only a small proportion of transactions.”

The study focuses primarily on the supply-based explanation for the link, but the researchers also note that the demand for bitcoin can create a similar demand for tether, particularly by investors who cannot move large sums of money into cryptocurrency directly.

Bitcoins image via Shutterstock