After the NFT market’s trading volume picked back up and reached $1.89 billion in February, wash trading on the NFT market went up.
The number of NFT wash trades on the top six nonfungible token (NFT) marketplaces went up by $580 million for the fourth month in a row.
The manipulation of trading volumes and prices caused by NFT wash trading can mislead investors and create a false impression of market activity. This can be detrimental to the overall health of the market and lead to inflated prices and bubbles.
A new report from CoinGecko says that volume in February 2023 was $250 million, which is 126% more than the month before. The report says that the rise is linked to the overall recovery of trading volume on the NFT marketplace, which reached $1.89 billion in February.
The report covered six marketplaces: Magic Eden, OpenSea, Blur, X2Y2, CryptoPunks, and LooksRare. With $280 million (49.7%), $150 million (27.7%), and $80 million (15.1%), respectively, X2Y2, Blur, and LooksRare were the most important NFT wash traders in February.
Magic Eden and OpenSea, which are the last two marketplaces, are said to have $590,000 and $42.57 in NFT wash trading, respectively. On the other hand, the report says that CryptoPunks did not see any NFT wash trading.
The CoinGecko report showed that 23.4% of “unadjusted trading volume” on the six largest marketplaces in the industry was made up of NFT washing trading. Wash trading of NFTs is using repeated transactions to change the number of trades or the price.
Wash trading is against the law in traditional financial markets, but there aren’t any clear rules about it in the crypto space or with NFTs.
In January, investor Mark Cuban said that wash trading would cause the next “implosion” of the market. New technology based on artificial intelligence has come out to solve problems in the NFT market, such as wash trading.
wash trading can make it difficult for regulators and market participants to accurately assess market conditions and make informed decisions. In the case of the scam involving fake Blur token airdrop websites, the effect was the theft of $300,000 from unsuspecting investors.