Reports have surfaced over the past few weeks that crypto users in Nigeria have been buying Bitcoin (BTC) at a rather hefty premium. On the surface these reports may seem correct, but they are essentially wrong and this report will look at how.
Nigerians won’t buy Bitcoin for $34,000
The emerged reports state that Nigerians are currently buying Bitcoin at a price of $34,000. These reports take into account the fact that the digital asset is currently being sold for over 17 million Nigerian naira on P2P platforms (which by the way is the only way Nigerians can buy and sell crypto), but they then use the official central bank rate of $1 to 459.89 naira to reach the figure of $34,000.
Well, as mentioned, this may seem correct on the surface, but it isn’t, and that’s because there are currently two different US dollar rates in the country. The central bank rate and black market rates are very different.
On February 1, the black market rate for the US dollar to the naira is around 750, which is used by the country’s broader population. When the price of BTC is converted using the official central bank rate, it is around $34,000. But since citizens literally can’t get dollars in the country except for official purposes and international school fee payments, and even then it can be a nightmare, the black market rate is what the country’s residents do.
With this black market rate, you come up with the same figure as everyone else – the figure of around $22,900 at which the digital asset is trading. Also, you sell your tokens at the same dollar rate you buy them at, not the CBN dollar rate.
BTC price recovers above $23,000 | Source: BTCUSD on TradingView.com
So Nigerians Pay a Big Premium for Buying Bitcoin? no Rather, they pay a high premium to buy the US dollar. This premium to the US dollar affects the buying and selling rate of everything in the country, and Bitcoin is no exception.
The claim that Bitcoin’s price has recently surged more than 50% above the general market price is false. Bitcoin has historically traded in the country at the black market dollar rate, so this is by no means a new phenomenon either.
The only thing that could have triggered the cash withdrawal limit in the country is greater acceptance of cryptocurrencies. There hasn’t been a 50% surge in bitcoin price in the past few days.
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