In February 2023, NFT wash trading volume surged to $580 million across the top six NFT marketplaces, marking a 126% increase from the previous month. Magic Eden, OpenSea, Blur, X2Y2, CryptoPunks, and LooksRare were the six marketplaces included in the report, with X2Y2, Blur, and LooksRare dominating the volume for NFT wash trading in February, accounting for $280 million (49.7%), $150 million (27.7%), and $80 million (15.1%) respectively.
NFT wash trading is an illegal practice where trade volume or price is manipulated through repeated transactions. While traditional financial markets strictly prohibit such practices, lack of clear regulations in the crypto space has allowed it to occur with NFTs and the broader crypto market.
According to the CoinGecko report, NFT wash trading accounted for a combined 23.4% of “unadjusted trading volume” across the six largest NFT marketplaces. The report also pointed out that some marketplaces incentivize users to increase trading volume through transaction rewards.
NFTs have gained immense popularity in recent years as a novel form of digital asset ownership that can represent anything from artwork to music and even tweets. Their limited availability and authenticity have contributed to their growing popularity.