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Demand for Bitcoin (BTC) in Nigeria has soared as fiat notes are about to be cancelled. This increase in demand caused BTC to be traded at a premium of up to 163.77% in Nigeria.
At the time of writing, peer-to-peer traders are selling BTC for as high as $62,499 on LocalBitcoins. That’s 163.77% above the current BTC price of $23,694.
BTC is trading at an average price of just over $38,000, meaning Nigerians will have to pay a minimum of a 60% premium amid soaring demand, according to LocalBitcoins.
On Paxful, BTC is trading between $28,000 and $39,300 in the country — indicating a premium of 18.1% to 65.8%.
As of February 2021, when Nigeria’s central bank banned financial institutions from providing services to crypto exchanges, the BTC premium had increased to around 36%.
What is increasing the demand for BTC in Nigeria
Nigeria’s central bank announced a demonetization program in 2022 that will render current fiat notes invalid. This measure aims to limit counterfeiting, inflation, and money laundering.
Following the demonetization announcement, banks began limiting the amount of cash Nigerians could withdraw from ATMs. The country is also trying to increase adoption of its central bank digital currency (CBDC), eNaira.
On January 29, the monetary authority pushed the deadline for handing in old banknotes became February 10 from January 31. While banks are trying to replace old notes with new ones, there is currently a cash shortage in Nigeria.
In January, Nigerians were only allowed to withdraw about $44 per day from ATMs.
Rising interest in BTC
Following restrictions on demonization and cash withdrawals, Nigerians are increasingly interested in BTC. Nigeria now has the highest web searches for the phrases “Buy Bitcoin” and “How to buy Bitcoin”, according to Google Trends.
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