Crypto investing strategies

Nigeria has the second-highest interest in Bitcoin globally, after El Salvador, as shown by Google Trends data.

The country in West Africa remains the most active Bitcoin adopter on the continent.

Stablecoins, such as USDT, are increasingly being used by Nigerian businesses and the expatriate population for payments.

It is becoming common for Nigerian travel agencies to quote their packages in US dollars and accept USDT as payment.

Although Bitcoin and other digital assets are still not widely used for payments, they have become “extremely popular” for savings and money transfers in recent years, particularly among the continent’s sizable diaspora.

Financial gain and hedging against the volatility in Nigeria’s precarious foreign exchange market are the main drivers for cryptocurrency owners and traders.

Bitcoin invested by a Nigerian resident in January has cumulatively outpaced food inflation and naira devaluation. The advantages of Bitcoin include high institutional adoption and anti-inflationary mechanisms.

Considering Nigeria’s socioeconomic and legal landscape, investing in cryptocurrencies necessitates a combination of prudence, education, and strategic planning.

Risk Management: Given the high risks associated with crypto, it is crucial to learn about risk management strategies, diversification, and the importance of not investing more than one can afford to lose.

Reputable Exchanges: Use well-known and secure exchanges like Coinbase or Binance. Research their compliance with Nigerian laws, user reviews for reliability, and security features.

Digital Wallets: Setting up secure digital wallets (both hot and cold) is critical. Cold wallets (hardware wallets) are recommended for long-term storage due to their higher security.

Start Small: Begin with small investments to understand the market dynamics without significant financial risk.

Diversification: Don’t put all funds into one cryptocurrency. Diversifying across different assets can mitigate risk.

HODL vs. Trading: Decide if you’re in for the long haul (HODL) or active trading. Trading requires more time and knowledge and can be riskier.

Phishing and Scams: Be wary of scams, especially in the crypto space. Never share wallet keys, be cautious with offers that seem too good to be true, and use two-factor authentication (2FA) on all accounts.

Secure Practices: Regularly update software, use strong, unique passwords, and consider using a VPN for additional security.

Join Forums and Groups: Platforms like X (formerly Twitter) or Reddit have communities where Nigerians share insights, strategies, and warnings about market trends or scams.

Stay Updated:  Cryptocurrency laws, new coins, technology updates, and market analyses should be part of your regular reading.

Inflation Hedge: Given Nigeria’s economic challenges, cryptocurrencies like Bitcoin can serve as an inflation hedge. However, this should not be the sole reason for investment.

Remittances: Digital assets offer a faster, cheaper alternative to traditional banking systems, especially for those receiving or sending money abroad amid regulatory warnings.

Prepare for Regulatory Shifts: Be ready to adapt to new regulations. The government’s stance might shift towards more integration with global financial systems, potentially affecting crypto’s role in the Nigerian economy.

For Nigerians, adopting cryptocurrency investing isn’t just about potential financial gain; it’s also about understanding a new financial paradigm that could reshape economic interactions.

Balancing enthusiasm with caution, continuous education, and strategic investment can pave the way for successful crypto investment in Nigeria’s dynamic environment.

Source:
Olumide Adesina

Olumide Adesina is a financial market writer, analyst and investment trader. Message Olumide on Twitter @Olumidecapital