Are Nigerians Really Buying Bitcoin up to $34,000?

[ad_1]

Over the past couple of weeks, reports have surfaced of crypto users in Nigeria buying bitcoin (BTC) for a fairly high premium. At first glance, it may seem that these reports are correct, but they are essentially wrong, and this report will explain how.

Nigerians don’t buy Bitcoin for $34,000

Reports that emerged claimed that Nigerians are currently buying bitcoin at a price of $34,000. These reports take into account that the digital asset is currently selling for over 17 million Nigerian Naira on P2P platforms (which is the only way for Nigerians to buy and sell crypto, by the way) , but then they use the official central bank rate of $1 at 459.89 Naira to arrive at the figure of $34,000.

Now, as mentioned earlier, this may seem fair at first glance, but it isn’t, and that’s because there are currently two different exchange rates for the US dollar in the country. The central bank rate and black market rates differ significantly.

As of February 1, the black market rate of the US dollar against the naira was around 750, which is what the wider population of the country uses. If the price of BTC is converted using the official central bank rate, then it is at the figure of $34,000. But since citizens literally cannot get dollars in the country except for official purposes and for payment of international tuition fees, and even then it can be a nightmare, the black market rate is what residents of the country choose.

Using this black market rate, you will arrive at the same figure as everyone else – the figure of approximately $22,900 at which the digital asset is trading. Additionally, you sell your tokens at the same dollar rate you buy them at, not the CBN dollar rate.

BTC Price Rebounds Above $23,000 | Source: BTCUSD on TradingView.com

So do Nigerian residents pay a high premium to buy bitcoin? No. Instead, they pay a high premium to buy the US dollar. This premium on the US dollar affects the buying and selling rate of everything in the country and bitcoin is no exception.

As for claims that the price of bitcoin has recently risen more than 50% above the general market price, they are false. Bitcoin has always traded in the country at black market dollar prices, so this is by no means a new phenomenon.

The only thing the cash withdrawal limit could have triggered in the country is the greater adoption of cryptocurrencies. There has not been a sudden 50% increase in bitcoin price in the past two days.

Follow Best Owie on Twitter for market news, updates, and the occasional funny tweet Featured Image by PYMNTS, chart by TradingView.com

[ad_2]