The central bank’s move to invalidate current notes and the subsequent cash withdrawal restrictions have increased demand for Bitcoin.
The demand for Bitcoin (BTC) in Nigeria has soared as the fiat notes are set to be invalidated. This rise in demand is causing 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 at prices 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 over $38,000, meaning Nigerians have to pay a minimum of 60% premium amid the soaring demand, according to LocalBitcoins.
On Paxful, BTC trades between $28,000 and $39,300 in the country — signifying premiums of 18.1% to 65.8%.
In February 2021, when the Nigerian central bank prohibited financial institutions from providing services to crypto exchanges, the BTC premium had risen to around 36%.
What’s boosting BTC demand in Nigeria
The Nigerian central bank announced a demonetization program in 2022 which would make the current fiat notes invalid. The move was aimed at curbing counterfeits, inflation, and money laundering.
Following the demonetization announcement, banks started placing restrictions on the amount of cash that Nigerians can withdraw from ATMs. The country is also trying to boost the adoption of its central bank digital currency (CBDC), eNaira.
On Jan. 29, the monetary authority pushed the deadline to submit old notes to Feb. 10 from the earlier Jan. 31. Amid banks attempting to replace the old notes with new ones, there’s currently a scarcity of cash in Nigeria.
As of January, Nigerians are allowed to withdraw only around $44 per day from ATMs.
Growing interest in BTC
Following the demonitization and cash withdrawal restrictions, 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.
