FACTORS INFLUENCING THE PRICE OF BITCOIN IN NAIRA
PRICE OF BITCOIN IN NAIRA: Bitcoin, the world’s first and most popular cryptocurrency, has seen a significant increase in adoption and usage in Nigeria over the past few years. As more Nigerians continue to show interest in Bitcoin and its potential as an investment asset, it is important to understand the factors that influence its price in Naira. Here are some of the key factors that influence the price of Bitcoin in Naira:
key factors that influence the price of Bitcoin in Naira
Global Demand and Adoption:
One of the most significant factors that influence the price of Bitcoin in Naira is global demand and adoption. As more people and businesses around the world start accepting Bitcoin as a form of payment, the demand for Bitcoin increases. An increase in global demand for Bitcoin will have a positive effect on its price in Naira as well as other fiat currencies. However, if demand decreases, it can lead to a drop in price. For instance, in 2021, the Nigerian remittance firm, Flutterwave, announced that it would start accepting Bitcoin as a payment option. This news positively impacted the price of Bitcoin in Naira.
Supply and Demand:
The basic law of supply and demand also applies to Bitcoin. When the demand for Bitcoin in Nigeria increases, but the supply remains the same, the price of Bitcoin in Naira will increase. Conversely, when the supply of Bitcoin increases, but demand remains the same, the price of Bitcoin in Naira will decrease.
Factors such as disease outbreaks, war, inflation, currency devaluation, and political instability can positively and negatively affect the price of Bitcoin in Naira. Inflation and currency devaluation can increase demand for Bitcoin as a store of value and hedge against fiat currency, driving up the price. However, political instability can lead to a decrease in demand and a drop in price. An example of the effect of this factor was in 2020, the outbreak of COVID-19 caused economic instability worldwide. This led to a drop in the price of Bitcoin in Naira and other fiat currencies as investors sought safer assets.
The media plays a significant role in shaping public perception of Bitcoin. Positive news coverage about Bitcoin often leads to an increase in demand, which drives up the price of Bitcoin in Naira. Negative news coverage, on the other hand, can have the opposite effect.
The regulatory landscape surrounding Bitcoin in Nigeria can also have a significant impact on its price. Positive regulations that legitimize Bitcoin can lead to an increase in demand and adoption, which drives up the price of Bitcoin in Naira. Negative regulations that restrict or ban the use of Bitcoin can have the opposite effect by limiting adoption, decreasing demand, and lowering the price. The effect of this factor can be seen in 2021 when the Central Bank of Nigeria (CBN) issued a circular directing banks to close accounts of individuals or entities involved in cryptocurrency transactions. This action had a negative effect on the price of Bitcoin in Naira, causing it to drop significantly.
Investor sentiment plays a crucial role in the price of Bitcoin in Naira. When investors are optimistic about the future of Bitcoin, they are more likely to buy, which increases demand and drives up the price. Conversely, when investors are pessimistic, they are more likely to sell, which decreases demand and drives down the price.
Technical developments such as software updates and improvements to the Bitcoin network can also have an impact on its price in Naira. For example, the implementation of the Segregated Witness (SegWit) upgrade in 2017 led to a decrease in transaction fees and increased the speed of transactions, which made Bitcoin more attractive to investors.
Finally, market manipulation can also influence the price of Bitcoin in Naira. In a largely unregulated market like Bitcoin, it is possible for large investors or groups of investors to manipulate the market for their own gain. This can lead to sudden spikes or drops in the price of Bitcoin in Naira. For instance, in May 2021, Tesla CEO Elon Musk tweeted that the company would no longer accept Bitcoin as a payment option. This news had a negative effect on the market sentiment towards Bitcoin, causing its price to drop in Naira and other fiat currencies.
The mining difficulty of Bitcoin is a factor that can impact its price. In May 2020, Bitcoin underwent its third halving event, which led to a reduction in mining rewards. This reduction in rewards made it more difficult for miners to earn Bitcoin, causing some to shut down their mining operations. This decrease in mining power negatively impacted the price of Bitcoin in Naira.
The resiliency of Bitcoin to always keep thriving and providing solutions for users where fiat has failed to help is one major reason why regardless of the possible negative influence of any factor, Bitcoin always keeps thriving. A good example is the rate at which Bitcoin is traded in Nigeria. Most users prefer to keep their money in Bitcoin and only hold fiat when there’s an absolute need for it. This is where web-based applications like DartAfrica come into play. DartAfrica allows users to exchange their crypto assets for fiat only when they need to, without having to keep their assets on the platform. Users just deposit the amount they need (min $20) at that moment, and the equivalent fiat is deposited in their DartAfrica wallet, this can then be withdrawn directly into their local bank account without any charges or third-party interference.
The price of Bitcoin in Naira is influenced by a variety of factors, including global demand and adoption, supply and demand, media coverage, government regulations, investor sentiment, technical developments, and market manipulation. As with any investment, it is important to stay informed about these factors and conduct thorough research before making any decisions. The factors influencing the price of Bitcoin in Naira can have a mix of positive and negative effects. It is important to keep an eye on these factors and their potential impact on Bitcoin’s price when investing in cryptocurrency.
price of Bitcoin in Naira – price of Bitcoin in Naira