It is no secret there is a lot of trading activity in the NFT segment. However, many people agree there is a good amount of wash trading to consider. Interestingly, the industry surpassed $30 billion in wash trades, representing roughly 45% of all volume.
Even though there are tens of thousands of NFT collections, many will never amount to anything. Like with altcoins, NFTs can be a quick pump-and-dump scheme by people looking to make money fast. Moreover, many non-fungible tokens have no intrinsic value or utility, which will reduce demand and cost investors a lot of money.
Making matters worse is the substantial amount of wash trading plaguing the industry. Such antics became more apparent right after the LooksRare marketplace went live. Unfortunately, things haven’t improved all that much since then. Although the wash trades only represent 1.47% of all trading activity, they bring 44.51% of all trading volume. That is very problematic, confirming the high-profile collections remain subject to price manipulation.
The Dune dashboard tracking this activity paints an interesting picture. OpenSea has 2.39% in wash volume, whereas LooksRare remains at over 98%. X2Y2 has surpassed 86.5% in wash trades, and Element is at nearly 65%. Moreover, marketplaces like Foundation, Flip, Rarity Garden, and NFTInit have had zero wash trades. However, they also generate far less trading volume, except for Foundation.
It is also interesting to see aggregators don’t offer much help to avoid wash trading. Gem, Genie, X2Y2, Blur, Element, and BitKeep all note over 10% of their volume as wash trades. Reservoir is the one notable exception, at 0.22%. Smaller platforms do not have a representative total volume to draw any conclusions now. However, all platforms have low overall wash trades percentage-wise, making it harder to identify whether sales are legitimate.
Although the holiday season won’t warrant more NFT purchases, it appears the wash trading figures are on the rise again. The industry suffered big setbacks in early 2022 and mid-2022, yet it has calmed down. However, the number of suspicious transactions has risen again since late October 2022 and has represented nearly 20% of all volume ever since. That is not a good sign for anyone looking to buy an NFT. 
In the week of December 6-12, there was roughly $190 million in recorded organic NFT sales. Unfortunately, there was also over $77 million in wash trading. That remains a significant portion of overall volume, even if it represents just a few daily trades. It is up to aggregators and marketplaces to find ways to prevent this behavior, although that won’t be easy.
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