Exploring the Factors Behind the 60% Rise in Bitcoin Price in Nigeria
The local price of bitcoin in Nigeria has shot up by 60% due to a strong increase in demand. A bitcoin is now worth 38,000 dollars converted into the local currency, the naira. The reason behind the surge in demand is due to increasing tensions between the central bank of the country and its citizens. The central bank recently imposed new limits on cash withdrawals, which is a step towards a cashless society but is met with strong resistance as cash is an integral part of the people’s lives in Nigeria.
Central Bank Imposes Limits on Cash Withdrawals and Bitcoin Surges in Demand
With the digitization of money, the government has more control over how it is spent. Bitcoin offers a pseudonym alternative and can be traded peer-to-peer without a third party. The central bank imposed new limits earlier this month, limiting citizens to only withdraw 20,000 nairas (around $43.50) per day from ATMs and 100,000 nairas (around $217) per week. The goal is to curb the demand for cash and reduce the inflation of the naira currency.
However, there were long lines and complaints that there wasn’t enough time to meet the deadline to exchange old, higher-denomination bills for new currency. The central bank has now extended the deadline to February 10. This isn’t the first time that the local bitcoin price has skyrocketed in Nigeria. In February 2021, there was a ban on cryptocurrency exchanges in the country, causing the local premium to rise to 36%. The recent interest in bitcoin has also put Nigeria at the top of Google search queries.
Nigeria’s Bitcoin Rate Soars 60% as Central Bank Drives Shift to Digitalized Cash with New Credit Card Launch
Additionally, Reuters reported on January 26 that the Central Bank of Nigeria has launched a local credit card, AfriGo, to compete with Mastercard and Visa. The card is aimed at giving Nigerians better access to banking services such as receiving money from abroad. The reason behind the huge jump in the bitcoin rate in Nigeria is due to the central bank’s efforts to move its citizens to digitalized cash. At the time of writing, the price of 1 BTC on the Nigerian crypto exchange Nairaex is 17.8 million Nairas, which is around 35,425 euros, more than 60% above the current market price of bitcoin, which is around 21,300 euros at the time of writing.