- The War Between Two Great Fractions
- The Influence of Bitcoin's Price on the Dollar to Naira Rate
- How Does the Dollar to Naira Rate Affect Crypto Trading?
- How the Nigerian Government Responds to the influence of crypto on the Dollar to Naira rate
- The Stress-free Alternative
- Frequently Asked Questions (FAQs)
Most things in Nigeria depend on the exchange rate between the US dollar and the Nigerian naira. This is why measures were put in place to strengthen the naira against the dollar and make it easy for people to do international trade and investment in the country. The exchange rate value is determined by factors such as supply and demand in the foreign exchange market, economic policies, and geopolitical events.
The exchange rate is essential for the economy to be stable, as it affects inflation, crypto rates, and the overall cost of goods and services. Today we’ll discuss how the dollar-to-naira exchange rate affects the crypto industry.
The War Between Two Great Fractions
While cryptocurrency trading benefits Nigerians, it also brings about several challenges from the government. Many people who trade crypto are always edgy, due to the new policies set by the Nigerian government. Aside from the government, another concern is the lack of regulatory oversight, which exposes them to fraud, market manipulation, and security risks.
Furthermore, the decentralized nature of cryptocurrencies allows fraudsters to use this means for illicit activities, including money laundering, terrorism, and scams. Its volatile prices may challenge investors and traders from making significant gains over time.
The Influence of Bitcoin’s Price on the Dollar to Naira Rate
When we talk about the influence of cryptocurrency trading in Nigeria, we simply mean the cost of buying crypto, sellers getting profit, and the reflection of Bitcoin’s price on the Naira.
While Bitcoin is a decentralized digital currency that operates independently of traditional financial systems, its price can be influenced by external factors like exchange rate fluctuations. So changes in the exchange rate can greatly affect the demand for and value of Bitcoin.
For example, during the recent economic inflation, there was an increase in demand for Bitcoin as a store of value and hedge against currency devaluation. This surge drives up the price of Bitcoin in the local market, leading to higher trading volumes and speculation. So we can say that a strengthening naira may dampen Bitcoin demand. Because investors will seek alternative investment opportunities for higher returns.
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How Does the Dollar to Naira Rate Affect Crypto Trading?
We’ve explained how crypto influences dollar to Naira rates, now it’s time to explore its flip side.
1. The Cost of Buying Crypto Increases
When the naira weakens against major fiat currencies like the US dollar, it increases the cost of purchasing cryptocurrencies. This is because most traders buy their cryptocurrencies in dollars, which means: the more the inflation, the more money you need to buy crypto. New and professional traders might likely not trade due to the fluctuation of the currency to avoid running at a loss.
2. It Affects Profits for Nigerian Crypto Sellers
Most Crypto sellers don’t profit as much as they did back then when the naira was stable. A stronger naira may result in lower profits for them because when converting their cryptocurrency earnings back into the local currency there will be a decline in profit.
Why does this happen? Because a stronger naira results in a higher exchange rate. Hence, sellers receive lesser naira for the same amount of cryptocurrency sold. All crypto traders and investors must carefully monitor exchange rate movements to optimize their trading strategies and maximize profitability.
How the Nigerian Government Responds to the influence of crypto on the Dollar to Naira rate
From freezing accounts to arresting crypto business executives, the FG has always stood its ground regarding crypto businesses. But is it all speculation or is there some element of truth?
Here are a few reasons why the government believes that crypto is responsible for the dollar to Naira rate fluctuations:
Unauthorized transfer of money: Most people who trade, make use of cryptocurrencies as a means to send money across international borders. Although not criminal, it disrupts national economic regulations and capital controls. And if done excessively, it may affect the dollar to Naira rate.
Funding Illegal Operations: The Nigerian government believes cryptocurrencies are used to launder money, finance terrorism and embezzlement. Cryptocurrencies are also used to secretly fund illegal operations across borders because they are untraceable.
Tax Evasion: They also affirm that digital currencies are used for tax evasion, further weakening the economy. Thus, policies have been implemented to reduce this risk and ensure economic stability.
![](https://blog.jackocoins.com/wp-content/uploads/2024/03/1710160118523-1024x576.jpg)
The Stress-free Alternative
Observing this from the FG’s perspective, it is no wonder why harsh regulations and penalties, such as the Binance and the P2P trade ban, are implemented. However, if you’re a crypto trader affected by these restrictions, there’s no need to worry.
Did you know you can still trade crypto without fear of government policies?
Yes, with Jackocoins, you can easily sell your BTC, USDT, and BUSDT without fear of getting flagged by banks or other financial institutions. The process is seamless, effective, and in line with governmental regulations. Enjoy a secure, transparent, and worry-free alternative for trading and exchanging cryptocurrencies. All you need to do is download the app, create an account with us, and start trading today!
Frequently Asked Questions (FAQs)
What effect does the dollar have on cryptocurrency?
When the naira weakens against major fiat currencies like the US dollar, it increases the cost of purchasing cryptocurrencies.
How does cryptocurrency affect the market?
Suppose there’s an increase in demand for Bitcoin as a store of value and hedge against currency devaluation. In that case, This surge drives up the price of Bitcoin in the local market, leading to higher trading volumes and speculation.
What is the Dollar to naira black market rate today?
The buying rate is at ₦1,465 per US Dollar. While the selling rate is ₦1,466 per US Dollar.
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