29 January 2018

Nigerians Begin Cut Back On Bitcoin Exposure

Photo: Bitcoin

With South Korea taking the first step towards curbing cryptocurrency trading, further spurring a continued decline in the value of Bitcoin especially, more Nigerians are cutting back on their exposure to cryptocurrencies in an effort to cut back on their losses.

The value of Bitcoin has so far declined to $11,031 per unit. From over N1.8 billion traded on Bitcoin alone in the country in the week ended January 13, 2018, the volume dipped to N577.75 million last week.

The reduced exposure is unconnected with the free fall of the cryptocurrency which has lost almost 30 per cent of its value since the middle of last month when Bitcoin prices began to fall. Specifically, bitcoin has shed $4,253.22 or N1.548 million in the past one month.

A unit of Bitcoin was selling at N4.050 million or $11,097. South Korea had last week Tuesday announced that it will no longer allow the use of anonymous bank accounts used in buying and selling cryptocurrencies with effect from next week Tuesday, January 30, 2018.

The measures are designed to prevent children and criminals from trading Bitcoin in a country that has embraced the digital currency amid its rapidly-ascending price.

Vice Chairman of the Financial Services Commission, Kim Yong-beom, told pressmen in Seoul yesterday that local cryptocurrency traders will not be allowed to make deposits into their virtual currency exchange wallets unless the names on their bank accounts matches the account name in cryptocurrency exchanges.

Tuesday's announcement follows a string of warnings from global policy makers about cryptocurrency trading, including those from South Korea's chief financial regulator last week who said the government might consider shutting down domestic virtual currency exchanges.

The regulator has previously said it would come up with detailed guidelines for local banks to properly identify its clients by their real names in cryptocurrency transactions.

According to Lukman Otunuga, an analyst at FXTM, market jitters over South Korea banning cryptocurrency trading has effectively eroded investor appetite for Bitcoin. "With reports on a renewed crackdown on the cryptocurrency in China fueling anxiety over future restrictions, further losses could be on the cards in the near term. The sharp depreciation witnessed in Bitcoin today should remind investors on how explosively volatile and unpredictable the cryptocurrency can be.

Financial heavyweight Warren Buffet has already warned that "cryptocurrencies will come to a bad end", and very early signs can be reflected in Bitcoin's bearish price action today. Otunuga who noted that Bitcoin could currently in the process of flickering violently before it burns out, said "from a technical standpoint, Bitcoin is under pressure on the Daily charts. The breakdown below $12,000 may encourage a further decline towards $11,000 and $10,000, respectively."

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