The price of Bitcoin in Nigeria is surging beyond market levels as demand increases. This has been largely caused by central bank restrictions on cash.
The Bitcoin premium in Nigeria is currently around 64%. The cost of 1 BTC on one of the country’s leading exchanges, NairaEx, is 17.2 million nairas (NGN). This works out at a whopping $37,378 U.S. dollars. The market value of BTC is currently $22,866.
Furthermore, the price on peer-to-peer markets is even higher, according to some reports from Paxful users.
Nevertheless, it is not the first time there has been a massive Bitcoin premium in the West African country.
In February 2021, the Central Bank of Nigeria banned regulated financial institutions from providing services to local cryptocurrency exchanges. As a result, the demand for BTC surged, pushing the premium as high as 35%.
Human Rights Foundation Chief Strategy Officer Alex Gladstein explained that the “Nigerian regime enforces a fake “official” value to the naira around 450/dollar where the street rate is 750/dollar.” He added:
“In reality BTC just lets you get all your money in a cross border payment to Nigeria. People aren’t actually paying $40K+ in *real dollars* for BTC.”
Nigerian ATM Anarchy: Bitcoin Solves This
The Bitcoin premium has been caused by a run on ATMs due to restrictions on cash imposed by the central bank.
Nigerians were only permitted to withdraw a maximum of 20,000 nairas which is around $43.44, from cash machines per day, from Jan. 9. There were also limits placed on over-the-counter cash withdrawals and weekly limits on the maximum allowed. Furthermore, the new rules were imposed by the central bank as it launched new banknotes.
This week the central bank extended a deadline previously set for Jan. 24 for citizens to exchange their old notes for new ones. The new deadline for changing banknotes is Feb. 10.
The central bank aims to curb money laundering and keep inflation under control, but it has driven people to Bitcoin instead.
According to local media reports on Jan. 31, both new and old notes were unavailable from ATMs or OTC on Monday. A cashier in Zenith Bank told the outlet, “we do not have new naira, and we are not paying old notes.”
The rare ATMs that are dispensing new banknotes are charging fees on other bank cards and only supplying 1,000 nairas ($2.17) per transaction. As a result, there has been carnage at ATMs in the country:
Central Bank Wants a Cashless Society
Nigeria’s central bank is on a mission to eradicate cash and go fully digital. Its eNaira CBDC, launched in October 2021, has failed to gain traction among Nigerians who prefer cash and crypto.
However, a year after it was launched, just 1 in 200 Nigerians were using the eNaira.
Nigeria also plans to regulate cryptocurrencies as its central bank has failed to contain a blockade it imposed in early 2021.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.