The recent tanking in Bitcoin prices has done damage to crypto markets all across the world. Loss of investments is most notable in Africa. Nigeria is the largest cryptocurrency market in Africa by participation. However, it was a faltering market in the wake of the price tumble.
In mid July, 2018, CCN reported a growing signup of Nigerian business people to the Bitcoin community. The online cryptocurrency publication reported a growing liking of cryptocurrency at the expense of the national currency, the Naira. As one of the reasons for the shift, CCN cited volatility. The Naira looks to be more volatile than the cryptocurrency. Business people had grown a fear of handling their business in the currency due to sudden sharp price changes.
The Naira more volatile than bitcoin?
Nigeria is a typical African country under the burden of debilitating corruption. There is an instability of government services and the regulatory environment is not solid. These and many other issues affect the performance of the Naira. Most importantly is the problem of terrorism. Boko Haram is a real danger to the economy of the largest African country by population. By extension, the insurgent activities of the group adversely affect the international price of the Naira.
In the fight for relevance in Africa, cryptocurrencies first made landfall in Africa’s largest economy by GDP. Many businessmen use Bitcoin to make international purchases, at least until last week. This is for the reason that Bitcoin was more stable against international currencies like the Chinese Yuan, compared to the Naira.
The faltering Bitcoin market a lack of investor “grit”
On the contrary, a report in the Leadership, an influential newspaper in Nigeria, says the opposite. According to the paper, trading volume of Bitcoins fell from N1.604 billion earlier this month to N1.387 billion. This implies an almost N300 million difference which is very substantial.
The publication notes that much of this difference might have come from the losses from the price slump. According to the paper, Nigerians might have rushed out of the market fearing a crisis. However, the newspaper notes that the mass exit is responsible for accelerating the Bitcoin price slump. The faltering Bitcoin market is not in Nigeria alone. Across the continent, Bitcoin holders are even fewer after the slump. It seems many investors in Africa do not have the stomach for the Bitcoin price roller coaster.