How Nigerian crypto industry is handling the current bear market
It’s no news that the crypto bear market, likened by many to a massacre, has caused a lot of instability in the space. Investments in the crypto space have slowed, the number of participations is consistently declining and large industries such as the Decentralized Finance (DeFi) and Non-Fungible Token (NFT) ecosystems are seeing less and less participation on a daily basis.
Although the cryptocurrency market has not had the best of years, those building in the space in Nigeria are facing problems on two fronts. While facing the fallout of the cryptocurrency market, they are also facing tough economic and regulatory climates that have really hampered the growth of cryptocurrency usage in Nigeria.
While the CBN’s ban on banks regarding the processing of cryptocurrency-related transactions is still on, in addition to the current bear market situation, it has caused a significant reduction in interest from speculative players in the cryptocurrency space. A report by the Boston Consulting Group (BCG), in collaboration with Bitget, reveals that in terms of the size of the cryptocurrency market in Africa, Nigeria has the second largest market, behind South Africa. Nigeria was once the leader in terms of crypto market size and has seen its position taken as favorable regulations have helped other African countries move forward as they embrace this new technology.
The consistent fall of Nigeria’s native currency, the Naira, has made it even more expensive to participate in the space as P2P market operators. The only way to participate in the market is to trade $1 in stablecoins for over N700. As July inflation figures hit their highest level since 2005, the country’s inflation is now at 19.64%, one of the highest in the world.
As you can see, running a business in the Nigerian economy today is already tough. Now, trying to run a cryptocurrency business in Nigeria with a ban from the apex bank and no clear rules, the current bear market now seems like an episode of Tom Cruise’s hit movie series, “Mission Impossible”.
Nairametrics spoke to some key players and stakeholders in the crypto space to know how they are coping with the current bear market. Here are some of the comments we have collected;
- James Ademuyiwa – Head of Blockchain and Co-Founder, Scalex
James Ademuyiwa explained that there have been some disappointments but has made a point to make the most of the bear market. He explained, “As a business we were met with some disappointments at first because it was just on the verge of our first partnership with a major exchange community in Nigeria and this community is full of traders. The bear market wave hit us from that angle and we had to sit back and re-strategize.
“It would shock you to know that we did the unthinkable at the entrance of the bear market; earlier in May, Scalex raised some capital from Emurgo to continue building out the first automated P2P marketplace out of Africa. This good news spurred us forward, as we are more confident that we have not built a product for just the trend or now, but for the posterity of Blockchain in Africa.
“In addition to this, we as a company know that we build for all seasons, so we used that opportunity to have more partnerships and collaboration talks, which will become known to the public in a few weeks in the last quarter of 2022. We used also this opportunity to look more closely at different areas of users’ lifestyles, such as sports betting, to see how we can help them navigate smoothly through the storm and emerge profitable.
– In conclusion, it is safe to say that we have made the most of the bear market season while we are also preparing for the next bull run. Yes, it could be very bleak this season, but we’ve decided to focus on the silver lining.
He further stated that his portfolio has taken a beating just as much. He stated, “As a person, I am still trying to recover from my bleeding portfolio from the bear launch, but I have always been a HODLer, so I am not moved by the current market conditions. I would continue to HODL and increase my holdings of promising projects and tokens .”
- Rutherford Atayobo, CEO of Manilla Finance
Rutherford Atayobo explained that he was already prepared for the bear market as he took profits early and reinvested in other assets such as real estate. He stated, “A lot of times when people talk about the crypto bear market, it’s talked about in harsh terms and with a lot of disdain. We’re quick to forget that it’s this same industry that lifted a lot of people out of poverty in the last bull market, and the bear market is more as an inevitable reset in the market that gives more investors the opportunity to venture into the space.
“While I can’t say we’re happy that the bear market was ignited by the LUNA protocol collapse, it’s important to note that we’ve been preparing for it with the sole objective of returning to the market since most assets now was out for sale at almost 95% off. What could be better than that? One of the many ways we prepared for the capitulation was to take decent profits while the market was pumping and then reinvest the proceeds in other markets such as real estate and stocks. That way, after the capitulation, we are able to re-enter the market with the proceeds from our hedge.
“So I’d say we’re doing just fine and hopefully the Ethereum merger might just create another major bull market before a long winter.”
- Adetayo Adesola, Head of Growth, Amber Group
Adetayo Adesola explained that Amber Group is operating from a position of strength despite the current bear market. He stated, “Amber Group remains committed to the overall growth of its business following a successful US$200 million Temasek-led Series B+ round announced earlier this year. Valued at US$3 billion, I believe we are operating from a position of strength amid volatility in the global market.
“In recent weeks, the company has taken significant steps to strengthen its business resilience and secure investors’ assets and confidence in the company by insuring assets on behalf of our customers that collectively equate to over $100 million in coverage.
“This also aligns with our inherent market neutral strategy that allows clients to make gains in bullish or bearish markets for our earned products. In Nigeria, many clients have sought a hedge against high inflation and currency devaluation and are attracted by our steady returns on stable coins backed of US dollars, which is the highest in the market.”
- Harrison Obiefule, PR and Marketing Manager, FTX Africa.
Harrison Obiefule explained that although many things have been put on hold, FTX Africa’s growth strategy remains the same. He explained, “I would say no different from any other major player in the African crypto space. Many things are compressed at the moment for obvious reasons, but our growth strategy and business goals have not changed. We are still pushing for adoption through education, actively building the community and the team ours, and generally lays a solid foundation that we can build on and utilize when the bull cycle comes.”
