What you gave me a profitable and likely illegal example of a wash trade, but not a definition of wash trade.
A wash trade could be selling thing X for $100 and buying thing Y for $100 where X and Y are the same exact underlying thing. Just moving pointless trades back and forth inflates volumes, which makes people thing the market is moving.
See https://www.investopedia.com/terms/w/washtrading.asp for more
No you don't. But you do need to be buying and selling the underlying repeatedly for "some reason".
That "some reason" could be fraud, or it could just be tax-optimization. The important thing is, "wash trading" is the technique of buying-and-selling the same thing at nearly the same time... which has many many applications.
Many of those applications are illegal and fraudulent in a traditional market. So seeing something like 70% of the volume of the real world cryptomarket being wash trading suggests that there's more fraud in the cryptomarket than people generally realize.
Selling your own NFT to your self for a profit, that's something else, but its not a wash trade as in that case there is a price change.
Lets say rich person X wants to conduct large-scale wash-trades to artificially increase (or decrease) the price of [insert cryptocoin here].
By conducting it on Exchange-Foobar, Foobar's traffic goes up, while rich person X gets the price change they want. Win-win for both parties.
EDIT: Remember: exchanges win on volume. They want more trades, they don't care if the value goes up or down.
I kind if assumed it was the exchanges themselves faking it. Wash trading without colluding with the exchange is pretty expensive.
Ex: Interactive Brokers (a legitimate online exchange for stocks) hit it big with its monthly-subscription model: $$subscription / month $20 / for severely discounted trades (fractions of a penny per trade). https://www.interactivebrokers.com/en/index.php?f=1590&p=sto...
They'll answer. You explain to them that you want to give them $50,000 / month (or something) for 10-million trades/month or whatever.
If they let you, you do it. If they don't, call up another exchange and give them the same offer.
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Its called business. When the $$$ amounts go up beyond a certain amount, you make it worth their while to treat you specially. They want the volume, you want the trades. Old-school business, just talk with them and things happen.
If you sell yourself the security, it never left your hand so you didn’t realize a loss.
https://www.investopedia.com/terms/t/taxgainlossharvesting.a...
What robo advisors can do.. is sell say.. asset A that perfectly tracks an asset (say S&P 500)... and then buy asset B that perfectly tracks an asset (say S&P 500).
So you end up with the "same thing" at the end of the day, but got to harvest some losses.
That said, I think there are some iffy legal situations here, and you run the risk of breaking the law here.
https://www.investopedia.com/terms/r/robo-tax-loss-harvestin...
https://www.sofi.com/learn/content/automated-tax-loss-harves...
Because with TLH its not "the same asset" in that its not (a) the literal same item moved from one hand to the other. (b) its not the same item ticker (basically a day trade across accounts) (c) Its not buying/selling with yourself
Your example only works for NFTs because they are non-fungible.
Lets say you invent a new NFT. You sell the NFT to __yourself__ for $100. Then, you sell the NFT to yourself (again) for $200. Finally, you sell the NFT to yourself for $1000. Then you go to the public and say "Look, my NFT has grown 1000% in the past week, you should get in on it!!"
Then they buy the NFT from you for $500. Then suddenly they can't sell the NFT to anyone, because you were the only one buying ever.
Congrats, you just scammed someone for $500.