Nigeria’s cashless bid pushes Bitcoin premium to 63%

• The Bitcoin premium has reached 63% in Nigeria.
• Restrictions on cash withdrawals paired with a push towards a cashless economy led to an increase in demand for BTC. 

The recent effort of the Central Bank of Nigeria to push its citizens towards a cashless society has led to a sharp increase in the price of Bitcoin in the country.

The shift to a digitized economy, paired with the ongoing restrictions on ATM withdrawals, has prompted people to resort to the flagship cryptocurrency in order to carry out daily transactions.

Bitcoin premium ranges between 60%-120%

Notably, the price of one Bitcoin (BTC) on the Nigerian crypto exchange NairaEX

It represents a 63% premium against the market price of BTC at $23,603. However, reportedly, a majority of the Nigerian populace only has access to the black market dollar rate, which is around 700 Naira to a dollar. This is the same dollar-equivalent price displayed on most crypto exchanges in the country, including Binance and Bybit.

Meanwhile, the exchange rate among peer-to-peer traders on LocalBitcoins has reached a whopping $62,000, marking a significant premium of 162%.

It is here to be noted that the central bank issued a notice restricting cash withdrawals last month. The maximum cash withdrawal over the counter (OTC) per week was capped at 100,000 NGN for individuals and 500,000 NGN for corporations.

As for ATM withdrawals, citizens were allowed to withdraw a maximum of 20,000 ($43.4) NGN in a day with a weekly cap of 100,000 ($217) NGN. 

These restrictions came into effect earlier this month on 9 January, just before the circulation of new Naira banknotes. Speculations took the front seat while some stated that the government’s decision was aimed at combating inflation and money laundering.

Citizens initially had until 31 January to exchange their old banknotes for new ones, but the deadline has been pushed to 10 February. 

 The eNaira adoption push amid…

This is not the first time the Bitcoin premium has surged in Nigeria. In February 2021, the central bank prohibited regulated financial institutions from providing services to cryptocurrency exchanges. This decision led to a 36% increase in BTC premium at the time. 

Moreover, earlier this month, the Nigerian Central Bank published a report outlining the regulatory framework for stablecoins and initial coin offerings (ICO) in the country. However, most of the content pertained to eNaira

Despite becoming the first African country to launch a CBDC in October 2021, Nigerians declined to adopt the central bank’s initiative.

Interestingly, the Central Bank recorded 270,000 eNaira wallets in August 2022. However, it was found that Nigerians preferred to transact using stablecoins like Tether [USDT]. But with the cashless policy in sight, the nation’s financial regulator would hope citizens increase the eNaira usage.