Following a rebound in NFT marketplace trading volume, which reached $1.89 billion in February, the NFT market experienced an increase in wash trading.
For the fourth consecutive month, wash trading increased across the top six nonfungible token (NFT) platforms, with a $580 million total volume.
A recent analysis from CoinGecko states that the volume in February 2023 increased by 126% over the $250 million it did the previous month. The analysis suggests a connection between the increase and the NFT marketplace’s general recovery, which reached $1.89 billion in February, as the cause of the increase.
Wash trading is the practise of repeatedly transacting to manipulate trade volume or price.
Magic Eden, OpenSea, Blur, X2Y2, CryptoPunks, and LooksRare are the six markets featured in the article. X2Y2, Blur, and LooksRare each contributed $280 million (49.7%), $150 million (27.7%), and $80 million (15.1%) to the wash trade volume in February.
The marketplaces have previously incentivized users to increase trading volume via transaction rewards.
The other two markets, Magic Eden and OpenSea, recorded wash trade of $590,000 and $42.57 million, respectively. Contrarily, no NFT wash trade was seen by Crypto Punks, according to the study.
According to the CoinGecko research, NFT washing trading accounted for a total of 23.4% of the “unadjusted trading volume” on the six biggest exchanges in the sector.
Although wash trading is forbidden in conventional financial markets, it is also a problem in the wider crypto community and with NFTs because there are no clear restrictions in place.
Investor Mark Cuban predicted that wash trading will lead to the next “implosion” in the cryptocurrency market back in January. New technology based on artificial intelligence has also emerged to address problems in the NFT industry, such as wash trading.
A fresh fraud involving websites advertising false BLUR token airdrops occurred, as reported on March 16; $300,000 was successfully taken in the scheme.
