Roughly 48% of Ethereum NFT trades in October were fake

Roughly 48% of Ethereum NFT trades in October were fake

Traders seeking to artificially inflate the price of collections or earn marketplace trading rewards generated $389 million in wash trades during October.

Global NFT sales in October clocked in at more than $850 million over roughly 3 million total transactions. I looked into NFT wash trades last month and that research got me to look at the numbers more closely.

Footprint Analytics – NFT Monthly Sales

The trigger points for me to say that transactions are becoming more fake are as follows:

  1. Despite bad market conditions, we continue to see a high number of unique buyers and sellers. In October, we had over 1 million unique buyers and sellers. Both buyers and sellers have increased compared to September.
  2. The number of unique buyers and sellers seems to be inconsistent with the growth of sales value and transactions. Around 1 million users contributed more than 4 million sales value in May versus less than 250,000 in October. To me, it seems unlikely to have a growing market demand with less sales value traded.
Footprint Analytics – Sales value vs. Unique users

To look into this further, I spoke with two centralized exchanges that operate NFT marketplaces. The exchanges said that around 80% of new buyers are keeping NFTs in their wallets, rather than selling them. With the market so unfavorable, holding these assets seems to be the sensible move.

So where are all these unique buyers and sellers coming from? I had a word with Footprint Analytics and brought up my points. I realized that the statistics I am looking at are way too big. It involved multiple chains and it is hard to track everything. We agreed to work on only Ethereum-based marketplaces as an example to dive deep into since it is the most popular.

Here are the findings:

According to Footprint Analytics’ filters, wash trading makes up nearly half of all NFT trading volume.

Footprint Analytics – ETH NFT Market Overview (With Wash Trading Filtered)

Traders seeking to artificially inflate the price of collections or earn marketplace trading rewards generated $389 million in wash trades out of October’s total of $758 million in NFT trading volume — bringing the amount of wash trading in the NFT market close to half that of organic trading.  The number of wash trading users accounts for nearly 46% of total users.

Footprint Analytics – Marketplace Market Share Wash Trading Filtered & Without Filtered
Footprint Analytics – NFT Sellers & Buyers Without Wash Trade
Footprint Analytics – NFT Sellers & Buyers

Wash trading is a form of market manipulation where an investor simultaneously sells and buys the same financial instruments to create misleading, artificial activity in the marketplaceIt creates enormous dissonance in the NFT industry between what most people imagine NFT trading is i.e., someone buying an NFT for speculation, and the behavior which actually underlies the market — hundreds of insiders transferring NFTs between their own wallets.

There are several indicators to identify suspicious trading activity.

Signals and indicators include:

  1. Overpriced NFT trades with 0% creators fees
  2. Specific NFT IDs that are bought more than a normal amount of times in a day
  3. NFTs bought by the same buyer address in a short period of time

The incentives for wash trading are to earn platform rewards and to create an appearance of value or liquidity for assets. Because there is no way to prevent or discourage wash trading in the NFT market today, people have a hugely misguided picture of the amount of organic, genuine trading activity in the industry.

For example, 81% percent of all trades on X2Y2, one of the top 3 NFT marketplaces, were wash trades according to the filters applied. The main reason for X2Y2 wash trading is volume-based daily trading rewards. The larger the percentage of volume a user contributes to X2Y2, the larger the share of daily trading rewards the user will earn. A similar breakdown can be observed when looking at individual collections. For example, of Dreadfulz’ $1.1 billion in total volume, $1.131 billion was flagged as wash trading.

Footprint Analytics – Marketplace Wash Trading Stats
Footprint Analytics – All Time Top 10 Most Wash Traded Collections

An analyst or writer who does not understand this wash trading dynamic risks grossly misunderstanding the current market. For example, here’s what Business2Community wrote on Oct. 12 about Terraforms by Mathcastles:

“Non-fungible token collections continue showing strong resilience amid the current general crypto market downturn so far this year. Here are some of the top-selling NFT collections this week: 1. Terraforms Reclaim The Top Spot. Terraforms, a non-fungible token (NFT) collection from Mathcastles, has reclaimed the top spot after flipping below our ten top-selling lists last week. Terraforms has a 24-hour sales volume of 1,814 ETH.”

The next collections the article listed were BAYC and CryptoPunks, which have nearly no wash trading. This would give a reader the impression that Terraforms more of a popular collection than those blue chip collections when in reality there were almost no organic trades.

Footprint Analytics – Bored Ape Yacht Club Trading Stats
Footprint Analytics – Cryptopunks Wash Trading Stats
Footprint Analytics – Terraforms-by-mathcastels Wash Trading Stats

By filtering trades for wash trading, traders, analysts and investors can more accurately evaluate NFT assets and the industry. Having accurate datasets and using them are two separate things. My role here is not to whistleblow or break the NFT myths, I am here to share my knowledge and tell my side of the story to everyone.

Using this article, I would like to make a request to analyze CEX NFT marketplaces’ data. Binance or Bybit NFT Marketplace would be ideal.

 

Source: https://cryptoslate.com/roughly-48-of-ethereum-nft-trades-in-october-were-fake/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Apples and oranges? How the Ethereum Merge could affect Bitcoin (With additional commnets)

Apples and oranges? How the Ethereum Merge could affect Bitcoin (With additional commnets)

Additional comments by Anndy Lian on top of what CoinTelegraph has mentioned.

The Merge is the right direction for cleaner crypto mining. The more direct impact I see after the transition is that bitcoin becomes the biggest target for green activists. There were more reports about bitcoin’s energy usage and mostly negative.

And because of the switch, many experts also said miners would forgo POW mining, but I say otherwise. I see the ETH POW Forks projects are working hard. The miner communities are now more united now than ever. For example, Bitmain also brought down the prices of their Antminers to help the miners get back into profits. These various factors helped the miners offset their operating costs in this bear market, keeping them alive.

Additionally, a good point to highlight is bitcoin’s hash rate. The hash rate continues to surge, recording new all-time high daily. The chip shortage has turned around, and the price of GPU is now at a more reasonable value. Taking GeForce RTX 3090 Ti, for example, the MSRP is $2,000, and it came down to $1,030 in September. These are positive signs for bitcoin.

As I have said before the transition, the impact of The Merge will not have too much boost for the crypto industry in the short run. What Vitalik has planned for Ethereum is a long-term vision. As for bitcoin, it is another kind of animal; it is the big brother. If bitcoin drops, the impact on every other cryptocurrency is inevitable.

 

Apples and oranges? How the Ethereum Merge could affect Bitcoin

While the Ethereum Merge failed to move Bitcoin from a price standpoint, the industry believes we have yet to see the effects of its shift from PoW to PoS.

It’s been a month since Ethereum said goodbye to an essential feature its blockchain shared with Bitcoin. Called the Ethereum Merge, the long-hyped upgrade was widely celebrated, with the blockchain ecosystem. However, for the mainstream audience or even for the average trader, it felt more like a Star Wars Day celebrated by sci-fi geeks than an early Christmas.

As the Ethereum Merge occurred on Sept. 15, the most extensive blockchain ecosystem parted ways with the proof-of-work (PoW), the energy-hungry consensus mechanism that makes Bitcoin tick. The Ethereum blockchain now works on a more eco-friendly proof-of-stake (PoS) mechanism that doesn’t require any mining activities, leaving thousands of miners worldwide scratching their heads.

Price-wise, Bitcoin is yet to take a hit from the fundamental shift of its closest competitor. A whole month has passed since the Ethereum Merge, and the BTC price is still stuck between $18,000 and $20,000.

However, the overarching mainstream narrative of “Bitcoin should contribute to the world, not destroy it by depleting energy resources” is rekindled with Ethereum’s significant switch to a system that keeps blockchain alive with minimal resource consumption.

Ethereum avoided a dead end

Cointelegraph reached out to industry insiders to get a clearer picture of the Ethereum Merge’s impact on Bitcoin.

“PoW was a dead end for Ethereum,” says Tansel Kaya, a lecturer at Kadir Has University and the CEO of blockchain developer Mindstone, “Because an Ethereum network that doesn’t scale can not live up to its promise.”

However, the Bitcoin community is not happy with the way its biggest price competitor took, according to Kaya. The BTC community often criticizes PoS for being vulnerable to censorship, he remarked, adding:

“If what [Bitcoin maximalists] say is true, Ethereum will either turn into a docile fintech network that is censored by governments, or a centralized structure like EOS, controlled by wealthy investors.”

Speaking to Cointelegraph, Gregory Rogers, CEO and founder of crypto-based gifting platform Graceful.io, noted that the Merge solidified the two distinct blockchains’ positions in the market. “Ethereum remains the transaction chain of choice with its increased speed and reduced fees,” Rogers said, adding, “Bitcoin is now the store of value of choice. They were already headed in this direction, but the Merge simply clarifies it.”

From a price point, though, multichain marketplace UnicusOne founder and CEO Tashish Raisinghani believes that Bitcoin price will take a hit. “The crypto industry had a hard time because of macro-level challenges which resulted in the current bear market,” he said, adding that the Merge would make Ethereum more sustainable compared to Bitcoin, “Which hasn’t yet been able to recover from the Chinese mining crackdown in 2021.”

PoW is unrivaled in network security

Addressing the energy side of the argument, John Belizaire, CEO of eco-focused data center company Soluna Computing, told Cointelegraph that even though Ethereum’s switch to PoS could save energy, “It will also undermine the core decentralization aspect of cryptocurrency.”

Although Bitcoin’s PoW consensus mechanism is energy-intensive, it is also fundamental to the blockchain and “is the best choice for any cryptocurrency that prioritizes network security.”

Co-locating flexible crypto mining centers with renewable energy plants can help stabilize the electric grid, solve renewables’ wasted energy issue, and provide an abundant source of cheap energy to crypto miners, Belizaire added.

The Merge united crypto miners

Bitmain also brought down the prices of Antminers, its flagship crypto mining units, to help miners get back into profits, he added:

Despite the Merge, Ether miners won’t simply forgo PoW mining just because Ethereum Classic is not minted via mining anymore, according to Anndy Lian, author of the book NFT: From Zero to Hero. Lian told Cointelegraph that the EthereumPoW (ETHW) project — the result of a hard fork after the Merge — is working hard and the miner community is more united than ever.

“These various factors helped the miners offset their operating costs in this bear market, keeping them alive.”

Joseph Bradley, the head of business development for Web3 service provider Heirloom, likened Bitcoin to “a global risk asset that is correlated to TradFi markets.” Bradley told Cointelegraph that, although Ether may be traded similarly, it still has neither the market depth nor the size that Bitcoin has. “Do we expect the world to become more or less chaotic in the coming years?” he asks rhetorically, answering:

“Most people would lean towards more chaotic. Security will matter during this time. Bitcoin will become even more important. Expensive energy will create innovation with miners — They will most likely move toward positioning Bitcoin mining as an extension of the electrical grid itself.”

Bitcoin and Ethereum: “Apples and oranges”

Not everyone agrees that the Ethereum Merge will have an impact on Bitcoin, though. Martin Hiesboeck, head of research at crypto exchange Uphold, dismissed a direct comparison between Ethereum and Bitcoin as “apples and oranges.”

Hiesboeck told Cointelegraph that Ethereum is basically a “company controlled by venture capitalists,” that’s why the transition to proof-of-stake aims to improve its economic and environmental credentials:

“Bitcoin doesn’t need to do that. Bitcoin is not a brand. Bitcoin is a computer network. Its output represents money. Nobody owns it. There is no brand. No CEO.”

Khaleelulla Baig, the founder and CEO of crypto investment platform Koinbasket, supported Hiesboeck’s argument, telling Cointelegraph that the Merge won’t have any meaningful impact on Bitcoin as these assets serve different purposes.

Bitcoin’s purpose is “to prove itself as a superior store of value to fiat currencies,” according to Baig. The PoW mechanism goes well with the purpose of Bitcoin, “As it helps the network maintain the scarcity of 21 million BTC via its difficulty adjustment rate,” he added.

Bitcoin as a PoW and Ethereum as a PoS network are making significant contributions to the crypto-asset ecosystem by competing with their best features. Tansel Kaya summarizes: “Having two distinct approaches rather than one is more suitable for the spirit of decentralization.”

 

Source: https://cointelegraph.com/news/apples-and-oranges-how-the-ethereum-merge-could-affect-bitcoin

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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ETH to BTC prediction: Will post-Merge Ethereum rise to challenge Bitcoin domination?

ETH to BTC prediction: Will post-Merge Ethereum rise to challenge Bitcoin domination?

Bitcoin (BTC), the crypto market pioneer, is, by market capitalisation, twice the size of ethereum (ETH), the second largest coin. Will ETH eclipse BTH following successful completion of The Merge that saw it switch to the proof-of-stake (PoS) consensus mechanism?

Here we take a look at the ETH to BTC exchange rate, and what factors are shaping ETH/BTC in 2022 and beyond.

What is ETH/BTC?

ETH/BTC represents the exchange rate between ether, the Ethereum blockchain’s native coin, and bitcoin, the native coin on the Bitcoin Network.

ETH/BTC represents how many bitcoins can be bought for one ether, with the rise in ETH/BTC signifying either a rise in ETH or fall in BTC, and vice-versa.

BTC was meant to be “a purely peer-to-peer version of electronic cash”. However, over the years the cryptocurrency has also become a store of value and a comparison to gold as a hedge against rising inflation.

Bitcoin mining relies on a blockchain that connects all public transactions. Using a proof-of-work (PoW) consensus, BTC miners compete against one another to solve mathematical equations and confirm the legitimacy of transactions. They are rewarded in BTC tokens.

In order to reduce the rate at which new BTCs are given as rewards, the cryptocurrency was designed to undergo halving events roughly every four years. A halving reduces the number of bitcoins released into circulation by half, limiting supply.

Ethereum, a programmable network for building decentralised applications (dApps), was launched in 2015, and was inspired by bitcoin’s limitations.

“While Bitcoin is only a payment network, Ethereum is more like a marketplace of financial services, games, social networks and other apps that respect your privacy and cannot censor you,” Ethereum’s website says.

Another key element of Ethereum is the blockchain’s ability to run smart contracts – computer programmes on the blockchain that allow for the creation and smooth running of dApps.

Just like BTC, ETH initially used a PoW mechanism, but since 15 September 2022 relies on PoS. The change became known as ‘The Merge’, and was designed to reduce Ethereum’s energy consumption by around 99.95%.

The Merge is one of a series of upgrades. In a July presentation, the platform’s co-founder, Vitalik Bouterin, named the following development stages, but did not specify when they will happen:

  • The Surge – the addition of Ethereum sharding, which will lower the cost of bundle transactions and make operating easier.
  • The Verge – users will be able to become validators without having to store large amounts of data.
  • The Purge – will simplify the Ethereum protocol and cut down on the amount of space the blockchain uses.
  • The Splurge – this upgrade includes “all of the other fun stuff”.

These updates also have potential to affect the ETH price  shaping the ETH to BTC exchange rate.

ETH to BTC historical rate chart

The ETH to BTC exchange rate surged by 2,518% in the first two years after the pair started trading, from 0.005767BTC in August 2015 to the all-time high of 0.151BTC in June 2017, signifying the quicker rise in ether’s price.

However, this peak in the ETH to BTC price chart did not last long. The exchange rate fell to 0.02427BTC in December 2017 – down 83.9% since the June peak.ETH to BTC exchange rate, 2015 - 2022

The ETH value reached $1,396.42 in January 2018, and the ETH to BTC rate jumped to 0.09724 BTC.

ETH to USD exchange rate, 2015 - 2022

ETH managed to uphold its positive trend against BTC for the next three weeks as the price chart gained 16% more, peaking at 0.1131BTC on 1 February 2018.

ETH to BTC performed fairly well for the duration of 2021, peaking in mid-May at 0.08178BTC, when the ETH price reached $4,168.7 and BTC was trading at $50,000.

The ETH/BTC pairing was not hugely affected when the BTC value reached its all-time high of $66,971.83 in November 2021, It did peak in December 2021 at 0.0879BTC after briefly falling to 0.06034BTC on 19 October 2021.

BTC to USD exchange rate, 2015 - 2022

Following the collapse of the TerraUSD (UST) stablecoin and its sister token LUNA and the wider crypto crash that followed, the ETH to BTC exchange rate fell by nearly 30% from 0.07554BTC in May 2022 to 0.05373BTC in July, indicating a faster decline of ETH price.

ETH’s price dipped to as low as $993 in June, with BTC slumping to $19,017 amid the bearish sentiment in the cryptocurrency world sparked by LUNA collapse and tightening monetary policy.

Ether rose  to 0.0846BTC in September 2022 in anticipation of The Merge. The current exchange rate stood at 0.07088 BTC, as of 20 September.

Is The Merge driving ETH/BTC?

On 15 September Ethereum successfully upgraded its system from PoW to PoS after a six-year build-up. However, the ETH price did not rally as much as investors were anticipating.

Anndy Lian, chief digital advisor at the Mongolian Productivity Organisation and author of NFT: From Zero to Hero. noted that right after The Merge, the price swung above $1,640 and fell shortly after:

“This is very much expected. There was much influx of ETH into various exchanges since the 12th and then building up to around 1.8 million ETH before the completion. In this case, I see that investors could be planning to sell off before the price fell.”

Lars Seier Christensen, chairman of the Concordium Foundation and founder of Saxo Bank, said that the Ethereum community anticipated a “much more positive reaction to the successful Merge”. He added that the recent rally was what in TradFi we call “buy the rumour, sell the fact” and that whoever saw The Merge as upbeat news had already bought ETH.

“Merge is really a non-event. It changes nothing in terms of scalability or fees, and actually antagonises a number of long-term Ethereum supporters – the miners,” he added.

Eugene Zomchak, CoinLoan’s head of product, told Capital.com that the value of ETH to BTC is likely affected by other microeconomic factors such as the cryptowinter and the Fed’s policy tightening than The Merge, noting:

“There are some positive forecasts coming in from enthusiasts who note that the Merge was a landmark event and the price of ether could surge by two, three and even five times.”

Since The Merge, the BTC price has been fluctuating between $19,000 and $20,000. ETH reached $1,469.74 on 17 September before falling to around $1,300, as of 20 September.

Lian stressed that it is important investors remind themselves that the effects of The Merge, possibly including the ETH to BTC price, will only be felt in the long-term:

“The gas fees will remain the same, and other scalability issues are still unsolved. The community at large must wait for Surge, Verge, Purge, and Splurge improvements to see a reduction in transaction costs and boost scalability significantly.”

Concordium Foundation’s Christensen also noted that the current market environment is challenging:

“The correlation to broader asset markets is very clear, and if stocks don’t recover, this will add to negative sentiment. If Ethereum goes decisively below 1,400, I think we could see a significant sell-off.”

Christensen added that the next Ethereum upgrades will be in focus:

“The most important thing is increased scalability, which will reduce fees. Until that happens, Ethereum is in effect not much use, and entirely reliant on Layer 2 solutions that provide much less security than Ethereum itself.
“Considering how difficult the Merge has been to execute, with years of delay, my personal belief that Ethereum can deliver the next stages in a speedy fashion is limited. Ethereum has one advantage and one advantage only: a very loyal ecosystem that will go through the most extraordinary and irrational hurdles, just to stay loyal. I wonder how long that will last.”

ETH/BTC exchange rate forecasts

Based on its analysis of past price performance as of 20 September, algorithm-based forecasting service Wallet Investor predicted that ETH/USD could trade at $2,391.383 in 2023 and reach $7,135.056 by 2027.

In terms of bitcoin prediction, the site saw BTC/USD trade at $33,668.92 in 2023 and reach $79,969.28 by 2027.

While Wallet Investor did not provide a direct ETH/BTC exchange rate forecast, the data suggests that they expected the rate to be 0.335BTC in 2023 and 0.421BTC in 2027.

DigitalCoinPrice supported a positive ETH/USD forecast, as of 20 September, and expected the coin to grow to $1,832.85 by the end of 2022, $3,032.72 in 2023 and $5,417.40 in 2025. Its long-term prediction saw the token surge past $18,000 in 2030.

The site also gave an upbeat BTC/USD forecast, expecting the coin to grow to $27,580.79 by the end of 2022, $41,874.03 in 2023 and $76,453.11 by 2025, passing $264,000 in 2030.

DigitalCoinPrice expected the rate to be 0.0665BTC by the end of 2022, 0.0724BTC in 2023, 0.708BTC  by 2025 and 0.068BTC by 2030.

Note that forecasts and analysts’ expectations shouldn’t be used as a substitute for your own research. Always conduct your own due diligence and rely on your own projections. And never trade money you cannot afford to lose.

 

Source: https://capital.com/eth-btc-prediction-ethereum-bitcoin-merge-domination

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j