Wash trading in the NFT sector, how bad it is?

-

The NFT market is flooded with wash trading, a practice where traders create fake trades to inflate trading volumes.

Renowned NFT expert Andrew Forte recently shed light on this issue, showing how artificial, pumped trading volumes can mislead investors and users, probably leading to financial losses.

Numbers from leading NFT platforms reveal the true scale of this phenomenon.

Wash trading everywhere

According to the data, Blur and Magic Eden are highly affected by wash trading.

Blur has an overall volume of $1.29 billion, with 19% attributed to wash trading, resulting in a genuine volume of $1.05 billion, while Magic Eden’s total volume stands at $206.66 million, with 28% linked to wash trading, leaving an authentic volume of $148.83 million.

In contrast, OpenSea, the OG NFT marketplace shows the lowest level of wash trading at 0.88%, maintaining a healthy, organic trading volume of $376 million out of a total of $379 million.

nft
Source: X
nft
Source: X

Not every collection are equal

The rate of wash trading varies significantly across different NFT collections.

For example, the Bored Ape Yacht Club has the highest actual volume at $249.81 million, with $24.62 million stemming from wash trading, and the Mutant Ape Yacht Club follows with a volume of $127.58 million, including $12.08 million from wash trading.

Both have to deal with roughly 10% of fake trading volume. Other collections such as Azuki, Milady, and Ethlizards exhibit lower levels of wash trading.

There will be signs

Recognizing the signs of wash trading may be a good step for traders, and there are numerous examples what we can monitor.

Indicators include stable prices despite high-priced buys, low social media interaction coupled with high trading activities, and multiple trades involving the same buyer within a short time frame.

Also, when a single address engaging in frequent trading of a specific NFT often signals potential wash trading.

Wash trading remains a significant issue in the NFT market, so investors must stay aware and educate themselves on catching red flags and understanding market dynamics to make well-informed decisions.

Have you read it yet? Binance restores card payments

LATEST POSTS

OpenSea is back, but is the throne really safe?

The NFT market’s colder than a January in Siberia, sales are tanking, and everyone’s whispering that the glory days are over. But out of the...

Trump’s meme token skyrockets 70% after VIP dinner invite

The $TRUMP token just pulled a stunt that sent its price jumping over 70%. Why? Because the former president’s throwing a fancy gala dinner for...

Memecoins are on fire, but Dogecoin losing its crown?

You ever see a pack of wild dogs fighting over a steak? That’s what the memecoin market looked like this week. Outta nowhere, boom, the...

Kuwait’s crypto crackdown is here, mining, trading, and dreaming are all off the table

If you thought Kuwait was about to roll out the red carpet for crypto miners and traders, you’re in for a rude awakening. The Ministry...

Most Popular

Guest posts