Nearly 60% of NFT Trading Volumes in 2022 Was Wash Trading
A recent report published by blockchain analytics firm Dune revealed that nearly 60% of non-fungible token (NFT) trading volumes this year were wash trades.
Wash trading is a form of market manipulation in which a trader buys and sells a security to create the appearance of increased trading volume and activity in the market. In crypto, these activities involve buying and selling digital assets – fungible or non-fungible tokens – on trading platforms, intending to inflate transaction volumes. The end goal is to mislead other traders about the demand level for the asset.
One example of wash trading in the context of non-fungible tokens (NFTs) might involve a trader who owns a particular NFT and wants to create the impression that it is in high demand. The trader could set up multiple accounts on an NFT marketplace and use them to buy and sell the NFT back and forth, creating the appearance of high trading volume and driving up the price of that asset
