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Retail investors bet in Bitcoin rises, Hedge fund billionaire joins in crypto

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BITCOIN

When Bitcoin plunged to less than $5000 in March 2020, a lot of individuals were afraid to trade cryptocurrencies. There were so many crypto traders, including prominent professional traders, who expected that cryptocurrency would become a myth.

However, according to data obtained from the crypto analytics firm, the number of Bitcoin addresses having at least 0.1 BTC has risen by 14% over the past one year and by over two hundred thousand addresses since the start of 2020.

Crypto news aggregator, Unfolded, recently pointed out a chart pattern as shown below, saying that the net position count of accounts on the Chicago Mercantile Exchange (a global derivatives marketplace) considered “retail” has hit an all-time high of over 2,300 contracts:

“CME Bitcoin Commitment of Traders Report… Retail net positions hit an all-time high,” Unfolded wrote in reference to the below chart.-

In addition, these gained traction by the entrance of Paul Tudor Jones, a hedge fund billionaire into the Bitcoin space this month. Jones wrote in a report:

“At the end of the day, the best profit-maximizing strategy is to own the fastest horse. If I am forced to forecast, my bet is it will be Bitcoin. So, we need to adapt our investment strategy. We have updated the Tudor BVI offering memoranda to show that we may trade Bitcoin futures for Tudor BVI.”

The spontaneous surge in retail and institutional demand bodes well for the world’s most popular and valuable cryptocurrency.

Bitcoin’s price, like almost any other market, is determined on supply and demand principle: the strong demand for Bitcoin in recent days coupled with a cut in supply because of the halving has boosted the price of bitcoin presently trading at about $9,750 5 30 am local time.

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Naira drops by 1.3% against dollar, as CBN resumes forex sale to Bureau de Change

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The Nigerian naira eased 1.3% against the U.S. dollar on the official market on Friday, a day after the central bank said it planned to resume forex sales to retail currency operators as the country reopens its airports for international travel.

The naira opened for trade at N385.50 per dollar on the market, supported by the central bank. It later recovered to close at N381 per dollar, where it has been stuck since July, Eikon Refinitiv data showed.

The central bank in a circular on Thursday said it will restart dollar sales to bureaux de change operators from Aug. 31 after it suspended auctions in March due to a coronavirus-induced lockdown and after a 15% devaluation.

It said retail traders cannot resell dollars bought from the bank at more than N386.

The bank moved to unify the rates this month, bowing to pressure from international lenders to merge its multiple exchange rates, eliminating arbitrage which has cost the country billions in reserves as it tried to defend the naira. Reuters

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Naira strengthens against dollar‍

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Barely 24 hours the Naira was forced to a downward trajectory by dollar scarcity, it bounced back, closing at N477 to a dollar at the parallel market in Lagos.

Reports have it that the Pound Sterling and the Euro traded at N608 and N550, respectively.

The Naira, however, weakened marginally at the investor’s window, losing one point to close at N386 to a dollar.

The volume of trade at the window shrunk by 1.83 million dollars when compared to Tuesday, to close at 18.44 million dollars.

The Nigerian currency exchanged at N381 to a dollar at the official CBN window.

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Naira stable at N472/$1 in parallel market

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The exchange rate at the parallel market remained stable for the second consecutive day closing at N472/$1 on Wednesday, July 22, 2020. However, on the officially recognized NAFEX market, the forex turnover was down again by 59.1% while the exchange rate also remained stable closing at N388.17/$1.

Exchange Rates

Parallel Market: At the black market where forex is traded unofficially, the Naira remained stable closing at N472 to a dollar on Wednesday, according to information from FX tracker.

FT collates parallel market exchange rates as far back as 2017. The parallel market also caters to forex trades through wire transfers especially for buyers who cannot fulfill their dollar demands at the I&E window or the SMIS window. Exchange rate for wired transfer is often at a premium to the black market rate.

NAFEX:  The Naira also remained stable against the dollar at the Investors and Exporters (I&E) window on Wednesday, closing at N388.17/$1, this the same rate that was reported on Tuesday, July 21.  The opening indicative rate was N388.65 to a dollar on Wednesday. This represents a 15 kobo drop when compared to the N388.50 to a dollar that was recorded on Tuesday.

Exchange rate disparity: The exchange rate disparity between the official NAFEX rate and back market rate still remained widen on Wednesday and is still a whopping N84. Nigeria maintains multiple exchange rates comprising the CBN official rate, the BDC rates, SMIS, and the NAFEX (I&E window).

 

We reported a few weeks ago that the government had set plans in motion to unify the multiple exchange rate in line with requirements from the World Bank. Nigeria is seeking a world bank loan of up to $3 billion. The country has been under pressure from the International Monetary Fund and the World Bank for currency reforms.

Forex Turnover

Meanwhile, forex turnover at the Investor and Exporters (I&E) window recorded a further decline on Wednesday, July 22, 2020, as it dropped by 59.1% day on day. According to the data tracked, forex turnover decreased from $29.77 million on Tuesday, July 21, 2020, to $12.17 million on Wednesday, July 22, 2020.

 

Forex News

The forex turnover at the NAFEX window where investors and exporters trade forex was about $1.57 billion between June 2020 and July 17, 2020, which falls short of demand according to reports. This is according to the daily market turnover data tracked from the website of the FMDQOTC within the last few weeks. The forex turnover has averaged $47 million over the last 32 days.

 

The volatility of the foreign exchange market is fueled by low forex inflow and the activities of currency speculators who are encouraged by the widening gap between the official rate and the parallel market rate.

The data from the Central Bank of Nigeria (CBN) shows a decline in the external reserve as it fell from $36.57 billion on June 3, 2020 to $36.08 billion as of July 17, 2020. The declining external reserve reduces the capacity of the CBN to intervene in the forex market, thereby putting more pressure on the market.

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