Nigerian Crypto Investors at Risk in Massive Dell
By Chibuike Osigwe
The cryptocurrency market capitalization fell about $170 billion on Monday in the worst sell-off in more than three months, leaving all top virtual coins in the red.
Equities weren’t exempted either as investors relieved themselves of almost every risky asset to cash or Exchange-Traded Funds tracking less risky assets such as Treasury bills.
Cryptocurrency prices have moved sharply lower over the weekend falling to lows not seen since mid 2021. Microsoft founder Bill Gates yesterday warned that rising interest rates can cause a global economic recession, explaining that a combination of rate hikes by central banks and surging commodity prices mean that sellers seem to be in charge. “The bears on this one have a pretty strong argument that concerns me a lot,” he said in an interview with CNN correspondent yesterday.
Bitcoin extended it’s losses, reaching a $29,746 low and dropping below $32,000 for the first time since July 2021. It’s seen a drop of more than 59 percent from its all-time high in November, and a 20 percent loss in the previous 30 days. Ethereum and other major crypto currencies are faring even worse.
Terra’s luna has lost more than 50 percent from its value over the last 24 hours as the Luna Foundation Guard were forced to pull out all the stops to prop up the Terra USD (UST) stablecoin that still almost entirely broke its U.S. dollar peg. The massive decline affected Terra USD (UST) — a stable coin supposedly pegged to a dollar — to drop below a dollar reaching a 40-cent low.
Michael Novogratz, the billionaire cryptocurrency investor who leads Galaxy Digital Holdings Ltd., warned that he expected more corrections and a dip in the crypto market price before recovery.
“Crypto probably trades correlated to the Nasdaq until we hit a new equilibrium”, Novogratz said on Galaxy’s first-quarter earning call on Monday. He expects to see “a very choppy, volatile and difficult market for at least the next few quarters”.
The crypto market, especially Bitcoin, has mirrored the U.S. tech stocks since the beginning of the year with its correlation currently around record levels according to data from Bloomberg Intelligence. The crypto token had a slight rebound today as the U.S. S&P 500 and Nasdaq 100 equity futures stabilized and made a rebound as well.
At least 40 percent of Bitcoin holders are now losing on their crypto positions to stable coins like Tether (USDT) and USD Coin (USDC) , according to new data from Glassnode, a website that provides block-chain data and intelligence.
Nigerian investors gained in stable coin due to the naira-dollar rate. Others are converting and holding their cash to stable coins in the hope of currency gains. Elsewhere, investors and traders are using the opportunity to buy the dip, just like El-Salvador that bought more 500 Bitcoin in a move to lower the average cost of their holdings.
The data also shows that 15.5 percent of all Bitcoin wallets fell into a loss as it continues tracking tech stocks lower.
In the turn of events, most Nigerian traders are converting their spot wallets and liquidating their crypto positions to stable coins like Tether (USDT) and USD Coin (USDC). Those with slight loss in crypto gained in stablecoin due to the Naira-dollar rate while others are converting and holding their cash to stable coins in hope for currency gains.
Elsewhere, investors and traders are using the opportunity to buy the dip, just like El-Salvador that bought more 500 Bitcoin in a move to lower the average cost of their holdings.