Nigerian Bitcoin Premium Reaches 60% as ATM Withdrawals are Restricted
- Mridul Srivastava
- January 30, 2023
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The rise in the price of bitcoin in Nigeria clearly indicates the growing demand for digital currencies in the country. The Nigerian central bank has been pushing for a transition towards a cashless society. The restrictions on cash withdrawals from ATMs have played a major role in driving the adoption of digital currencies.
Currently, 1 Bitcoin has a value of 17.8 million Naira on NairaX, a Nigerian cryptocurrency exchange, equivalent to $38,792. This price is over 60% higher than the current market price of bitcoin, which stands at approximately $23,700.
Implementation to Control Inflation and Prevent Money Laundering
As of January 9th, individuals were restricted to withdrawing a maximum of 20,000 NGN (equivalent to $43.50) from ATMs daily with a cap of 100,000 NGN ($217).
This restriction was implemented before the release of new Naira banknotes in an effort to control inflation and prevent money laundering. Additionally, the central bank has given a January 24th deadline for citizens to exchange their old high-value banknotes for the new currency.
Introduction of Domestic Card Scheme by Central Bank of Nigeria
On January 26th, the Central Bank of Nigeria introduced a new domestic card program to compete with international cards such as MasterCard and Visa. Further, the “AfriGo” card was created to offer improved access to bank card services for Nigerians and reduce the expenses associated with foreign card usage, including fees and exchange costs.
The premium of over 60% in the price of bitcoin in Nigeria is not uncommon in countries with high demand and limited supply. However, it also highlights the potential for cryptocurrency investments to offer higher returns than traditional financial instruments in the country.