Over the last couple of weeks, reports have emerged that crypto users in Nigeria have been buying bitcoin (BTC) for a pretty hefty premium. On the surface, it may seem that these reports are accurate, but they are essentially wrong, and this report will address how.

Nigerians Are Not Buying Bitcoin For $34,000

The reports that have emerged have claimed that Nigerians are currently buying bitcoin at a price of $34,000. These reports take into account the fact that the digital asset is currently selling for over 17 million Nigerian Naira on P2P platforms (which is the only way Nigerians can buy and sell crypto, by the way) but they then U.S.e the official central bank rate of $1 to 459.89 Naira to arrive at the $34,000 figure.

Now, as previously mentioned, this might seem right on the surface but it is not, and that is because there are currently two different U.S. dollar rates in the country. The central bank rate and the black market rates differ widely.

As of February 1, the black market rate for the U.S. dollar to Naira is around 750 which is what the broader population of the country uses. If the price of BTC is converted using the official central bank rate, then it is at the $34,000 figure. But since citizens can literally not get dollars in the country except for official purposes and international school fees payments, and even then it can be a nightmare, the black market rate is what residents of the country go with. 

Using this black market rate, you will arrive at the same figure as everyone else – the around $22,900 figure that the digital asset is trading at. Besides, you sell your tokens at the same dollar rate you buy them at, not at the CBN dollar rate.

Bitcoin price chart from TradingView.com
BTC price recovers above $23,000 | Source: BTCUSD on TradingView.com

So are Nigerian residents paying a high premium to purchase bitcoin? No. They are rather paying a high premium to purchase the U.S. dollar. This premium on the U.S. dollar affects the buying and selling rate of everything in the country and bitcoin is no exception.

As for the claims that the price of bitcoin recently rallied more than 50% above the general market price, they are wrong. Bitcoin has always traded in the country at the price of the black market dollar rate, so this is not a new phenomenon in any way either.

The only thing that the cash withdrawal limit could’ve triggered in the country is the higher adoption of cryptocurrencies. There was no sudden 50% increase in the price of bitcoin in the last couple of days.