28.10.202209:39 Forex Analysis & Reviews: Nigeria's eNaira CBDC not widely adopted

On October 25, 2022, Nigeria had its first anniversary of the launch of eNaira, the country's national digital currency. The Central Bank of Nigeria, which launched the CBDC project, expected most Nigerians to quickly adopt the eNaira. However, many people have shunned the digital currency. Now, the central bank has offered a 5% discount to drivers and passengers of motorized rickshaws to promote its use among the people. Kingsley Obiora, CBN's deputy governor in charge of economic policy, said that the eNaira needs "a little push from the government."

Experts note that average Nigerians have not accepted Africa's first CBDC. There have been few downloads of the eNaira wallet, as residents of Nigeria increasingly use cryptocurrencies to transfer funds and make international payments.

From January to June 2022, BTC trading volume at Paxful, one of Nigeria's major P2P trading platforms, has reached almost $400 million. The figure is more than half the $760 million that was recorded in the whole of 2021. According to Paxful, Nigerians were resorting to cryptocurrencies and peer-to-peer trading platforms because they provide "an opportunity for financial inclusion."

Despite the apparent snub of the CBDC by Nigerians so far, the Central Bank of Nigeria (CBN) still expects the number of e-naira wallet downloads to increase eightfold. The regulator hopes to achieve this by employing various initiatives that include enabling the unstructured supplementary service data (USSD) functionality to the wallet app. As noted earlier, the central bank has recently offered a 5% discount to drivers and passengers of motorized rickshaws that pay with the eNaira.

However, economists continue to insist that the eNaira is not suitable for everyday use. The CBDC's low adoption rate should not come as a surprise.

On the technical side, Bitcoin has come under renewed pressure yesterday after the release of economic data in the US. BTC broke through $20,500 and decreased significantly. The key level for the cryptocurrency is the support level of $20,000 – a breakout below this level would severely affect Bitcoin. If BTC moves upwards, it could rise towards $20,540 and $21,140. From this area, it could then test the resistance levels of $21,840 and $22,525. On the other hand, if Bitcoin bulls fail to hold onto $20,000 amid continued pressure on Bitcoin, it would quickly slump towards the low at $19,360, opening the way towards $18,700.

Ethereum has also retreated slightly as traders took profit. The closest resistance level of $1,580 remains key for the altcoin. If ETH settles above this level, it would stabilize the situation in the market and could potentially extend the bullish trend, allowing Ethereum to test the high at $1,645. From there, the next targets would be $1,707. If ETH comes under renewed pressure and breaks through the support at $1,513, the level of $1,444, which has formed recently, would provide it support. A breakout below this level would push Ethereum towards the lows at $1,390 and $1,333, and if ETH returns to $1,264, it would lose its upside potential completely.