We have passed the stage where we thought crypto was a ponzi scheme. But the hard truth is, people still mourn the loss of their money, the same way people mourn lost goods after a landslide. Still Nigerian crypto traders would rather suffer occasional loss than face the terrible inflation ravaging the economy. Ever since the rising rate of adoption more and more individuals have invested in cryptocurrencies to protect their savings and earn more as well.
However it’s hard to deny the obvious, crypto can fall as fast as it rises. A number of cryptos have been unstable in the previous week. The crypto market lost over 4% in market cap last Saturday and the current decline is as a result of the growing tension between Russia and Ukraine- Russia’s positioning of over 100,000 troops on the border of Ukraine and the US inflation. A US media platform known as CBS News claimed Russia could attack anytime this week.
Bitcoin is being affected by the crisis. Last week, the US inflation, and now the unrest between Ukraine and Russia. Polkadot, XRP, Shiba Inu explode as BTC surpasses $43,000. The results are evident in losses that amount to 2.67%, its price has been reduced to $42.275. The market cap might need an improvement once the situation changes, it is currently at $802.32B.
Ethereum was also hit. Last week it’s performance shows a reduction in value amounting to 5.58%. Crypto market cap declines by 4% just 24hrs of news of Ukraine invasion.
Its performance last week also shows a 2.50% loss. The current market price of Ethereum is in the $2,931 range, though it is rather difficult to say what may happen next.
All these facts are to highlight what can happen with crypto at any time at all. With all the talk of decentralization, it is rather interesting how the Geopolitical conflict or the US inflation can pose a huge risk to the crypto market. This is a matter affecting the whole world and for us here in Nigeria it is not an exception.
Are Nigerians Losing Interest?
According to Finder Cryptocurrency Adoption Index, as of December 2021, its survey disclosed that 21% Nigerian adult internet users now hold cryptocurrency down from 24% ownership in october.
Among the 2,350 Internet users surveyed in Nigeria by December 2021, breakdown of the crypto ownership further reflected the investment appetite among men to be 58% and women to be 42%.
This is a good one owing to the fact that out of the surveyed Nigerian Internet users, 81% believe cryptocurrencies to be good investments, going beyond the global standard of 43%.
Pertinent Issues: why is the investment figure dropping?
Amongst many underlying issues are two major reasons for the 21% decline and that is; Collapse of the crypto adoption pyramid and Unfavourable policies. Just like chemical reactions in the lab, traders react to the crypto environment. The slightest change can either make or break the whole process. Technically, since it is decentralised people can just disengage without permission.
The Collapse in the Adoption Pyramid
In November, there was a fresh crackdown on holders and traders of cryptocurrency in Nigeria, with Zenith Bank, GTBank, FCMB and Kuda Bank leading the Central Bank of Nigeria (CBN) effort to sweep out crypto from the financial system.
Bank accounts believed to be involved in the digital currencies are shut down by the commercial and digital banks, with clampdown extending to accounts recording excess inflow and outflow.
Ripples Nigeria had reported the bank’s onslaught against the crypto holders who the CBN governor, Godwin Emefiele, had described as not to be credible investors during his defense of the ban of bitcoin and other altcoins.
However, the court had announced that the CBN doesn’t have the power to ban cryptocurrency, as its ban circular isn’t backed by the constitution of Nigeria.
Unfortunately, the banks clampdown has served as a deterrent to the growth in adoption of digital currencies. This has made investors reluctant.
Last year, Paxful data showed trading of the most popular cryptocurrency, bitcoin, fell from over 6 million in July to 2.8 million volume in November’s first week, representing a 53.3% decline in volume of trading among Nigerians. This is a massive landslide, hard to ignore.
Since Bitcoin and Ethereum hit their All-Time High in November, the cryptocurrency market has been shedding its gains to depreciate by 14.6% in market capitalization between October ending and December 31, 2021.
The market lost $387.30 billion during the two months period. This was due to the governments’ policies that discouraged crypto investors. Nigeria is not an exclusion, the government made crippling policies!
Nigerian bank clampdown and China’s decision to shutdown crypto miners business and close digital currency exchanges, and Russia weighing ban options.
This dragged down adoption, with sell off pulling down the value of coins like bitcoin to $46,306.45 as of December 31, 2021, from it’s highest level of $68,789.63 recorded November 10, 2021.
Bitcoin now trades at $37,957.51, 44.8% below the All-Time High, losing $30,832.21 in three months, hence, the sell off overshadowing FOMO (fear of missing out) – which had previously encouraged adoption – among Nigerians who are also battling fear of bank crackdown; consequently depleting ownership of cryptocurrency among holders in the country, who don’t want to lose their investment.
Would Nigeria stand in the midst of the threat?
Regardless of the dwindling ownership rate, Nigeria remained on the top ten cryptocurrency adoption, ranking sixth out of 27 countries surveyed by Ripples Nigeria, behind Vietnam (29%), India (23%), Australia (23%), Indonesia (22%), Philippines (22%).
Nigeria is well ahead of western countries, Canada (13%), Ireland (12%), United States (10%), Germany (8%), United Kingdom (6%), as well as its African counterparts, Ghana (17.31%), Kenya (15.78%) and South Africa (11.26%). This is huge considering all that’s currently happening around the world.
The circumstances may have made some traders lose interest. However, the foundation of crypto is deeply rooted in Nigeria, it might be a mission in futility to uproot it. Nigerian traders must look forward to the rising and falling but find a spot to hand go on and they will.