The price of Bitcoin in Nigeria is up by around 60% compared to other parts of the world amid measures 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 past ten years. Meanwhile, an examination of price data shows that BTC is more reliant on macro factors than it has ever been.
Bitcoin Premium in Nigeria Reaches Record 60%
The Bitcoin premium in Nigeria has skyrocketed to a record 63% amid measures by the country’s central bank to impose limits on ATM cash withdrawals to accelerate its shift to a cashless society. The BTC exchange rate on peer-to-peer platforms like LocalBitcoins has increased even more, reaching as high as 120%.
Currently, one BTC is trading for 7.8 million nairas, or over $38,000, on the Nigerian crypto exchange NairaEx. By comparison, the leading cryptocurrency is changing hands around the $22,800 mark on major crypto exchanges like Binance and Coinbase (NASDAQ:COIN).
In December last year, the Central Bank of Nigeria announced a demonetization program that would make the current fiat notes invalid. The move was aimed at curbing counterfeits, inflation, and money laundering.
Citizens are required to turn in old notes by February 10. Furthermore, citizens are only allowed to withdraw a maximum of 20,000 nairas (around $43.50) from ATMs per day, with a weekly limit of 100,000 nairas (roughly $217) in a bid to shift to a digitized economy.
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 by CoinGecko, the flagship cryptocurrency is up 38.4% over the past 30 days, on track to mark its second best January in the past 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 a surge in investment in Bitcoin-tied funds, which saw $116 million in inflows last week alone.
Bitcoin Is Becoming Macro-Driven
An examination of Bitcoin price performance near U.S. CPI releases by Kaiko has revealed that the leading cryptocurrency is becoming more macro-driven. “BTC volatility as measured by absolute hourly price moves is higher around U.S. CPI releases compared to the monthly average, a trend which first emerged in 2022,” Kaiko said in a report Monday.
The report noted that Bitcoin volatility, on the other hand, is not much relevant to the U.S. Fed meeting. Price volatility around Fed meetings has been declining since 2021, “although volatility is still higher than the monthly average, which suggests that this week’s upcoming meeting could still trigger some price movements,” Kaiko said, adding:
“The difference in trends could be due to how markets price in expectations in advance of Fed meetings, along with an increased emphasis on data rather than Fed talk. The trend coincides with global central banks’ shift towards more data-dependency and could explain why investors are much more sensitive to macro-data releases.”
Fed officials will meet on January 31 and February 1 to announce their latest interest rate decision. 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 the November CPI of 7.1%.
***
This article was originally published on The Tokenist. Check out The Tokenist’s free newsletter, Five Minute Finance, for weekly analysis of the biggest trends in finance and technology.