Despite news of Trump’s illness and regulatory risks materializing in the crypto markets, Bitcoin has been able to keep a steady pace to the top with its volatility dropping to its lowest point since November 2018. Meanwhile, the Nigerian Naira has suffered a 90% devaluation since 2016. This paints a picture of the widening gaps between Bitcoin and the Nigerian Naira.
Bitcoin is no stranger to market volatility or the global challenges that cause such volatility. 2020 has been a test of the king cryptocurrency’s ability to overcome tough conditions and negative market sentiments that more traditional assets have failed to keep at bay.
According to data from Coin Metrics, Bitcoin volatility dropped 43% in the past 30 days. International stock markets on the other hand, seem to be running out of steam after jumping through the hoops of 2020’s unpredictable terrain.
Nigeria’s Naira has faced similar bouts of unpredictability, further compounded by the inherent challenges of Africa’s most populous nation. Its oil curse has become a thorn in its side as it continues to depend heavily on an industry which it is not able to effectively manage. As a result, the import-dependent nation and its households have lost significant amounts of purchasing power.
According to Mr. Francis Anatogu, Secretary, National Action Committee on AfCFTA,
“Since 2016, naira devaluation is about 90%, from a business perspective, how would you stop value erosion? The way to do that is by exporting whatever we produce to Africa, which gives exposure to other currencies,”
Between 1999 and 2018, the purchasing power parity of Nigeria grew from 19.4 to 124.9 LCU per international dollars rising at an increasing annual rate which reached a maximum of 25.29% in 2010. The figure fell to 7.69% in 2018. The change in trend paints a picture of not only the effects of the nation’s lack of diversification but the future of its monetary system.