Bitcoin (BTC), the largest cryptocurrency by market cap, has seen a surge in demand in Nigeria amid high inflation and foreign exchange shortages.
According to recent data from Paxful, Bitcoin’s trading value has spiked to 17,181,275.6 NGN ($37,317.34) – up 131.96% in a month. Consequently, Bitcoin is currently trading at a premium of 61% in Nigeria compared with its price on exchanges like Binance, which is at $23,183.27 at press time.
Authorities in Nigeria have announced stringent policies aimed at reducing the excesses of fiat currency through the Central Bank of Nigeria, its apex bank. In October, the bank announced that the 1,000, 500, and 200 naira notes would be replaced, making the old notes invalid.
Following this development, the government gave its citizens a deadline to return the old notes to commercial banks. Earlier, the apex bank announced January 31 as the deadline but has extended it by ten days.
As part of the policies, the apex bank drastically reduced the amount of fiat that individuals or corporate institutions could withdraw within a certain period. The government seeks to curb counterfeits, inflation, and money laundering through these measures.
The newly designed notes have not circulated to every length and breadth of the country, thereby increasing the scarcity of cash within the economy. The development has influenced people in Nigeria who have become stranded by the status quo to increase interest in Bitcoin.
Due to the increase in this demand, the trading value of the digital coin in Nigeria began to rise beyond what is available in other countries. Peer-to-peer traders sold BTC for as high as $62,400, particularly on LocalBitcoins.
Although BTC and other cryptocurrencies are always notable for having uniform trading values across the globe but, sometimes, internal factors tend to influence the trading value of cryptocurrencies in a country, making it sell at a different price from the value obtainable in other regions.
Naira’s value against USD has declined steadily for months, losing over 9% of its value in one year, and foreign exchange shortages and inflation made the situation worse. Experts say Nigerians are hedging against the drop in the value of their currency, the naira, by trading more dollar-denominated digital assets.
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