One moment it’s 2020 then before you know it, it’s 2021. The year has been full of many surprises from a COVID-19 pandemic to a steaming pot of political activism in key geographic regions. Despite the many moments of fear, paranoia, and disdain felt in 2020, there is much to smile about, including the astronomical prices of Bitcoin and its rising influence on the global stage.
Nigerians Rise Above Challenges With Bitcoin
As Nigerians find solutions to economic advancement in spite of government failures, the usefulness of Bitcoin becomes more apparent. In 2020, Nigeria has become the second largest Bitcoin market after the US. The nation has made a name for itself as a Bitcoin capital where millions of dollars in transactions take place on a weekly basis.
More recently, policies restricting the use of traditional remittance platforms caused Nigerians who would usually depend on traditional money transfer services, to look to Bitcoin. On December 16, the CBN instructed International money transfer operators (IMTOs) to stop the processing of diaspora remittance payments in naira. Many Nigerians, with a dire need for remittance, opted for Bitcoin. This is an echo of earlier months where certain #ENDSARS protesters had to opt for Bitcoin after access to their bank accounts was blocked by authorities. As a result, more Nigerians than ever are aware of the wider range of benefits that come with owning Bitcoin.
Before the 2016 recession, Nigeria’s economy was growing at 6.3% . Right before COVID struck, growth had slowed down to 2.2%. In the same period, inflation and underemployment increased, casting a shadow over prospects of significant industry growth in 2020. Development challenges continue to cripple the nation, making way for a new era where more Nigerians (and African nations with similar economies) rely on decentralised finance tools like Bitcoin. As an example, the nation, despite having a market value of $468 billion, was outmatched in value by Bitcoin after it reached a price of $25,000. Nigeria’s GDP is $448.1 billion, the largest of any country in Africa.
Price of Bitcoin Reaches Record Levels
The heightened use of Bitcoin in the nation is taking place during a time period where the price of the apex cryptocurrency is skyrocketing, presenting favourable opportunities for Nigerians who own Bitcoin to reap financial rewards from their holdings.
Bitcointreasuries.org reveals holdings by different companies of over 1.1 million in BTC worth over $30 billion. The huge stash of Bitcoin reserves held by well known companies began increasing after billion-dollar firm Microstrategy purchased $250 million in Bitcoin in August.
More institutional investors have poured into the market for Bitcoin as they look for alternatives to fiat, gold, and silver. The cryptocurrency has already hit record highs of $29,000 after crossing targets of $20,000 and $25,000 earlier in the month.
Earlier in the year, Rick Rieder, Blackrock’s Chief Investment Officer, said cryptocurrency like Bitcoin “is here to stay,”. He suggests that Bitcoin is a durable mechanism that might substitute gold. Head of Research at Fundstrat Global Advisers shares similar sentiments. He believes Bitcoin is “killing it this year”.
Legendary trader Peter Brandt believes the cryptocurrency could rise to as high as $48,000 in January 2021.
“I expect this curve to be violated at some point, but not to produce 80% decline. Green curve is a larger parabolic advance from December 2018 and March 2020 lows. This is the driver of bull market.”
Brandt suggests that the presence of institutional investors makes a strong case for more bullish movement. However, tax selling in the U.S after January 1st could lead to a sell-off of Bitcoin. Despite this, he is holding firm to his $100,000 prediction for the cryptocurrency.
Regulatory Risks Arise
Meanwhile, Ripple and XRP face legal and regulatory threats, which have led to an XRP sell-off. According to the Securities and Exchange Commission (SEC) Ripple’s co-founder and current CEO were involved in the raising of funds beginning in 2013 through the sale of digital assets known as XRP in an unregistered securities offering to investors in the U.S. and worldwide.
According to the CEO of Ripple,
“This is an attack on the entire crypto industry and American innovation. By giving the stamp of approval only to Bitcoin and Ether (whose networks are at the mercy of the Chinese Communist Party), the SEC has picked the winners- disregarding an entire industry outside of these two tokens.”
Many see the charges against Ripple as a sign of things to come for the cryptocurrency industry but many also forget that the industry is innovating at rapid rates, creating its own foundations which could make the code behind cryptocurrency technology as powerful as, if not more powerful than law.