The naira currency gained one naira against the US dollar and settled at 758 naira/dollar against last week’s high of 778 naira per dollar thus with a differential of N20/$
USDT traders are betting that the harmonization of multiple exchange rates will yield favourable results for the country’s budget. A downward adjustment in the Naira exchange rate will result in an increase in Naira earnings from the translation of dollar earnings. Experts anticipate it will also reduce the arbitrage gap between the official exchange rate and the parallel market exchange rate. In a presidential statement, he announced the abolition of fuel subsidies.
Nigeria’s new President Bola Tinubu is quickly warming himself to investors after wasting no time in announcing an end to the country’s costly fuel subsidy program and unveiling plans to adopt a single exchange rate.
Similarly, the stablecoin landscape is getting smaller by the day, and that indicates less exposure to the USDT/NGN space
Consequently, most recent real-time data from Crypto Compare, stablecoin trade volumes this month had totalled just $292 billion as of publishing, putting the digital currency on course to post its lowest monthly trading volume since 2020. This comes after the stablecoin market trading volume decline of about 41% month over month in April
The market capitalization of the asset class hasn’t been presenting a better picture either; it has been falling for the past 14 months in a row and is currently hovering around $130 billion.
To make matters worse, the most popular stablecoin, USD-pegged Tether (USDT), has seen its lowest trading volume in four years, while also confusing investors and digital asset market watchers. Meanwhile, stablecoin market caps are declining as they approach their all-time highs. A record $83 billion
What you should know
Stablecoins are pegged to the value of another asset, often the U.S. dollar, and serve as the oil in the engine of digital asset and cryptocurrency trading, allowing for the on-ramp of fiat-backed money onto the blockchain. The two main risks to stablecoins are that users do not trust the reserve structure pegged to the issuer’s assets, effectively withdrawing funds in a run. Alternatively, trust in the crypto sector has waned, with users no longer needing stablecoins to trade and even withdraw funds.
Industry observers believe the decline in stablecoin trading volume is also a strong sign that investors in the digital asset space are cooling down a bit as they are not engaging in meaningful trading activity.
The crypto market plunged on May 31, letting go of its previous rally. Global crypto market capitalization fell 1.37% to $1.14 trillion, while top digital assets like Bitcoin and Ethereum fell 2%.
Investors are expected to sell their holdings as the BTC price ends the month down 8% for the first time this year. Bitcoin’s price is up 85% this year, but in mid-April, the rise started to slow and even dipped below the key 200 WMA level.