Bitcoin price in Nigeria has surged by around 60% compared to other parts of the world amid moves by the Central Bank of Nigeria to impose limits on ATM cash withdrawals. The flagship cryptocurrency has performed exceptionally well in the first month of the year, marking its second best January in the last ten years. Meanwhile, an examination of the price data shows that BTC is more dependent on macro factors than ever before.
Bitcoin Premium in Nigeria hits a record 60%
Bitcoin’s premium in Nigeria has soared to a record 63% amid moves by the country’s central bank to impose limits on ATM cash withdrawals to speed its shift to a cashless society. The BTC exchange rate on peer-to-peer platforms like LocalBitcoins has risen further, reaching 120%.
One BTC is currently trading for 7.8 million naira, or more than $38,000, on the Nigerian crypto exchange NairaEX. By comparison, the leading cryptocurrency is changing hands around the $22,800 mark on major cryptocurrency exchanges like Binance and Coinbase.
In December last year, the Central Bank of Nigeria announced a demonetization program that would invalidate current trust notes. The measure was aimed at curbing counterfeiting, inflation and money laundering.
Citizens must deliver the old bills before February 10. Additionally, citizens can only withdraw a maximum of 20,000 Naira (about $43.50) from ATMs per day, with a weekly limit of 100,000 Naira (about $217) in a bid to shift to a digitized economy.
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Bitcoin marks second best January in 10 years
Bitcoin started 2023 on a positive note, gaining around 40% since the start of the year. According to data from CoinGecko, the flagship cryptocurrency is up 38.4% over the last 30 days, on track to mark its second best January in ten years.
The coin only performed better in January 2013, when it gained around 55% in a month. The current rally has also led to increased investment in Bitcoin-pegged funds, which saw inflows of $116 million just last week.
Bitcoin Is Getting Macro Driven
An examination of Bitcoin price performance around the US CPI releases by Kaiko has revealed that the leading cryptocurrency is becoming more macro-driven. “BTC volatility as measured by hourly absolute price movements is higher around US CPI releases compared to the monthly average, a trend that first emerged in 2022,” Kaiko said in a report on Monday.
The report noted that Bitcoin volatility, on the other hand, is not very relevant to the US Federal Reserve meeting. Price volatility around Fed meetings has been declining since 2021, “although volatility remains higher than the monthly average, suggesting that the upcoming meeting this week could still trigger some price movements,” Kaiko said, adding:
“The difference in trends could be due to how markets price expectations ahead of Fed meetings, coupled with a greater emphasis on data rather than Fed talks. The trend coincides with the change from central banks worlds toward greater reliance on data and could explain why investors are so much more sensitive to macro data releases.”
Fed officials will meet on January 31 and February 1 to announce their latest decision on interest rates. The central bank is expected to raise interest rates by 0.25% as inflation cools. As reported, inflation decreased to 6.5% in December, compared to November’s CPI of 7.1%.
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About the Author
Ruholamin Haqshanas is an accomplished crypto and finance journalist with over two years of experience writing in the field. He has a strong understanding of various segments of the FinTech space, including the decentralized iteration of financial systems (DeFi) and the emerging non-fungible token (NFT) market. He is an active user of digital assets for remittances.