The practice of NFT wash trading, which involves artificially inflating the trading volume of non-fungible tokens (NFTs), continued to rise for the fourth consecutive month in February, according to market data. This suggests that the phenomenon, which has been scrutinized by regulators and industry players alike, is still prevalent in the NFT market. The surge in wash trading activity comes as the hype around NFTs continues to grow, with high-profile sales frequently making headlines. However, it also highlights the need for better regulation and transparency in the NFT market, to ensure fair and legitimate trading for all participants.
NFT Wash Trading Volume Continues to Grow, Reaching $580 Million in February
Non-Fungible Token (NFT) wash trading volume has experienced its fourth consecutive growth, reaching an all-time high of $580 million in February, according to CoinGecko’s latest report. The report reveals that the NFT marketplaces X2Y2, LooksRare, and Blur posted the highest volumes in NFT wash trading.
Understanding NFT Wash Trading
Wash trading, which is a fraudulent practice in the finance industry, involves buying and selling assets at the same time for the same price. This can increase trading volume and potentially manipulate market prices. NFT wash trading can occur when two NFT holders agree on the terms or when a single NFT holder sells from one address and purchases from another.
NFT Wash Trading on the Rise
In February, the NFT wash trading volume on the six largest NFT marketplaces reached an all-time high of $580 million, a staggering 126% increase from January’s $250 million. Interestingly, the last time NFT wash trading recorded a decrease was in November 2022 when it fell to $190 million from October’s $330 million. Since then, the total NFT wash trading volume has been growing.
NFT Marketplaces Contributing to Growth
Among the six largest NFT marketplaces, X2Y2, LooksRare, and Blur collectively accounted for the most significant shares in NFT wash trading volume. X2Y2 had the highest volume, contributing $280 million, which is over 49% of the total volume. Blur and LooksRare also contributed $150 million and $80 million, respectively. Even OpenSea contributed $42.57 million, while Magic Eden added another $590,000 to the total NFT wash trading in February.
NFT Market Resilience
The NFT market has proven to be one of the most resilient in the crypto space, even amidst the recent crypto winter. In fact, the NFT market has been on a recovery trajectory over the past few months, except for the current hit it received from the U.S. banking crisis. Despite this, recent data revealed that the NFT market returned to its pre-Luna crash levels in February. CoinGecko’s report also showed that NFT trading volume has steadily increased since October 2022, with Blur being the most significant contributor to the rise in NFT trading volume.
In conclusion, NFT wash trading volume is on the rise, contributing to the overall growth in the NFT market. The significant shares of the trading volume recorded by X2Y2, LooksRare, and Blur indicate these platforms’ popularity among NFT investors/traders. It will be exciting to see what the future holds for the NFT market, given its resilience thus far.