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The NFT market saw an uptick in wash trading following a recovery in NFT marketplace trading volume, which hit $1.89 billion in February.
The top six nonfungible token (NFT) marketplaces saw a rise in wash trading for the fourth straight month, with a total volume of $580 million.
According to a new report from CoinGecko, February 2023 witnessed a 126% increase from the previous month’s volume of $250 million. As for the reason for the jump, the report points to a correlation with the overall recovery of NFT marketplace trading volume, which hit $1.89 billion in February.
Wash trading refers to the manipulation of trading volume or price through repeated transactions.
The six marketplaces included in the report are Magic Eden, OpenSea, Blur, X2Y2, CryptoPunks and LooksRare. X2Y2, Blur and LooksRare played the largest roles in February’s wash trading volume, with $280 million (49.7%), $150 million (27.7%) and $80 million (15.1%), respectively.
NFT wash trading volume, January 2022–February 2023. Source: CoinGecko, Footprint Analytics
The marketplaces have previously incentivized users to increase trading volume via transaction rewards.
The other two marketplaces, Magic Eden and OpenSea, reported $590,000 and $42.57 million in wash trading, respectively. CryptoPunks, on the other hand, didn’t see any NFT wash trading, according to the report.
The CoinGecko report reveals that NFT washing trading made up a combined 23.4% of “unadjusted trading volume” across the industry’s six largest marketplaces.
While wash trading is illegal in traditional financial markets, the issue can be found in both the broader crypto space and with NFTs due to a lack of clear regulations.
Back in January, investor Mark Cuban said that wash trading will cause the next “implosion” in the crypto market. Meanwhile, new artificial intelligence-based technology has surfaced aiming to troubleshoot issues in the NFT market, including wash trading.
As reported by Cointelegraph on March 16, a scam recently surfaced involving websites promoting fake BLUR token airdrops, resulting in $300,000 being successfully stolen.
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