Technical Definition
Wash trading
Wash trading involves transactions arranged to create a misleading appearance of genuine trading activity or market interest without meaningful change in economic exposure.
By Crypto University Editorial
Pump and dumpLiquidityOrder book
✦ Key Insight
Artificial volume can mislead users about liquidity, demand, price discovery and marketplace popularity.
✕ Common Misconceptions
High volume alone does not prove strong organic demand.
Detailed Explanation
A participant may effectively trade with itself or coordinate accounts under common control. The resulting volume can make an asset or marketplace appear more active than it really is.
In Practice
“Two accounts controlled by the same operator repeatedly exchange an NFT to manufacture trading volume.”
Dig Deeper
Pump and dump
A pump and dump is a manipulation scheme in which promoters drive up an asset's price or demand and then sell into the artificially created buying activity.
Liquidity
Liquidity describes how easily an asset can be bought or sold in meaningful size without causing a large change in price.
Order book
An order book is a list of open buy and sell orders arranged by price on a trading venue.