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- Bitcoin is trading at an all-time high against Nigeria’s national currency, the naira.
- This price climb is due to the decline of the naira. Nigeria’s currency has fallen 65% compared to the US dollar in the last four months.
- Despite the naira’s fall, crypto trading remains popular in Nigeria.
Bitcoin is more expensive for Nigerians today than it was two years ago, when it reached its highest price in US dollar terms.
In fact, Bitcoin is trading at a new all-time high in Africa’s most populous country despite still being only halfway to its peak US dollar price of $69,000 attained in November 2021.
Nigeria ranks high in global crypto adoption. However, Nigeria’s crypto fondness is not why bitcoin has grown so expensive in the country. Instead, the reason lies in the massive decline of the naira, or NGN, Nigeria’s national currency.
The Naira has fallen against the US dollar by 65% since June. This fall resulted from the country’s central bank’s decision in June to allow market forces to determine foreign exchange rates — a policy known as floating.
Crypto trading in Nigeria is priced in US dollar terms, which is then converted to the naira value at the day’s exchange rate. The naira has lost so much ground to the dollar that the value of $1 has almost tripled in the country’s currency market since 2021.
As such, it costs more today in naira terms to become a wholecoiner, a colloquial term for an owner of at least 1 BTC, than it did back when bitcoin hit $69,000 in US dollar terms two years ago.
Bitcoin’s current US dollar price of about $34,000 is equivalent to 38 million Nigerian naira. BTC is even trading as high as 43 million NGN, according to the rates advertised by some sellers on the Binance peer-to-peer platform.
By comparison, it cost 29 million NGN in November 2021 to become a wholecoiner.
Presently, that amount — 29 million NGN — can only buy three-quarters of a bitcoin, showing the extent of the naira’s depreciation in the last two years.
Crypto still popular
The falling naira has not, however, dampened enthusiasm for bitcoin and crypto assets. Crypto trading in Nigeria has grown 9% since 2021, according to the latest global cryptocurrency adoption report published by Chainalysis, a blockchain forensics company. Chainalysis ranked the country second in its global crypto adoption index released in September.
Most of the growth since 2021 has been due to sustained interest in bitcoin and stablecoins, especially Tether’s USDT stablecoin, the report stated.
Stablecoin trading via crypto exchanges in Nigeria has crossed $60 billion over the last two years. Bitcoin volume in the country is nowhere near this mark but there has been a noticeable increase in BTC trading since Nigeria’s government decided to float the naira.
This flight of funds into bitcoin and stablecoins in Nigeria can be attributed to investors needing to protect the value of their capital, Kola Oyeneyin, CEO of private wealth fund Opportunik Global Fund told DL News.
“Any asset that offers protection in the immediate term becomes the alternative,” Oyeneyin said. “That’s why the value of digital assets and hard commodities are on the rise in some markets, including Nigeria.”
Nigeria is not the only country where bitcoin is trading at a peak price in local currency terms. The same situation is happening in Turkey where the local currency, the Turkish lira, has slumped over 30% against the US dollar since April. As a result, Bitcoin is trading at 960,000 lira now in dollar terms, vs 800,000 lira back in November 2021.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. To share tips or information about stories, please contact him at osato@dlnews.com.