Non-fungible token (NFT) has been on a downward spiral since their popularity peaked in 2021. Even though NFTs picked up a little pace in late 2022, they have failed to gain traction in the prolonged bear market.
Wash trading is a common tactic that has been used to manipulate the market. A recent report from CoinGecko has revealed that NFT wash trading has witnessed a spike in February, with a 126% increase.
NFT wash trading volume accounted for $580 million in Feb
CoinGecko compared the NFT trading volume on the top six prominent NFT marketplaces to come up with the data. According to the report, the trading data from OpenSea, Magic Eden, Blur, CryptoPunks, x2y2, and LooksRare were analyzed.
The data reveals that wash trading has been on a consecutive rise, with February recording $580 million. The NFT wash trading volume was $250 million in January, which represents a 126% hike in February. However, the report suggests that the wash trading is way below $11.56 billion in January 2022.
CoinGecko data identified x2y2, LooksRare, and Blur as the major contributors to the wash trade. These marketplaces contributed $280 million, $80 million, and $150 million towards the wash trades, respectively. NFT trading was comparatively lower on marketplaces including OpenSea, Blur, and Magic Eden last month.
The repetitive buying and selling of NFTs to create fake trading volume for a particular asset often end up as a difficulty where buyers and sellers end up taking the wrong decision on the wrong assets. Certain common signs, such as an address continuously purchasing the same NFT within a few hours or a non-fungible token purchased too frequently within a day, can be used to spot NFT wash trades.