Naira falls at parallel market, as expert predicts Bitcoin could drop to $26k

Tuesday, 1st June 2021: The exchange rate between the naira and the US dollar closed at N412/$1 at the Investors and Exporters window, where forex is officially traded.

The naira maintained stability at the I&E window, for the third day in a stretch to close at N412 to a dollar, the same as recorded last week Friday and Monday, 31st May 2021.

On the other hand, naira fell at the parallel market to close at N498/$1, edging close to N500/$1. Specifically, the naira depreciated from N495/$1 recorded on Monday, 31st May 2021 to close at N498/$1 on Tuesday.

Meanwhile, a J.P Morgan strategist and Bitcoin expert has predicted that Bitcoin’s price could fall to as low as $26,000 before longer-term momentum would signal capitulation. He said this on the back of the recent bearish performance of the flagship cryptocurrency asset.

Trading at the official NAFEX window

Naira remained stable against the US dollar at the Investors and Exporters window on Tuesday, 1st June 2021 to close at N412/$1.

• The opening indicative rate, however, depreciated by 19 kobo to close at N411.11/$1 on Tuesday, as against N410.92/$1 recorded on Monday, 31st May 2021.
• An exchange rate of N420.33 to a dollar was the highest rate recorded during intra-day trading before it settled at N412/$1, while it also sold for as low as 400/$1 during intra-day trading.
• Forex turnover at the Investors and Exporters (I&E) window decreased further by 22.7% on Tuesday, 1st June 2021.
• Data tracked by Nairametrics from FMDQ revealed that forex turnover reduced from $125.44 million recorded on Monday, 31st May, 2021 to $96.91 million on Tuesday, 1st June, 2021.

Cryptocurrency watch

The cryptocurrency market continued in its bearish trend, as the market lost about $10.41 billion in the early hours of Wednesday, 2nd June, 2021.

• The crypto market capitalisation declined by 0.78% to stand at $1.598 trillion as of 4:03am on Wednesday.
• While the world’s most popular cryptocurrency, Bitcoin, dipped further by 0.9% to trade at $36,372.54, Ethereum also traded bearish on Wednesday morning, with a decline of 0.76% to trade at $2,614.28.
• The month of May was that of significant losses for the crypto market, with the flagship cryptocurrency losing in excess of 36% in the month, representing its worst monthly performance since September 2011.
• Meanwhile, a JP Morgan strategist has warned that the downturn experienced by bitcoin is not yet over, and is likely to continue, as cited by Yahoo Finance.
• Nikolaos Panigirtzoglou, a J.P Morgan strategist and bitcoin expert said:

“We had argued previously that the failure of bitcoin to break above the $60k threshold would see momentum signals turn mechanically more bearish and induce further position unwinds, and that this has likely been a significant factor in the correction last week in pushing CTAs [commodity trading advisor] and other momentum-based investors to cut positions.”

“The longer-term signal remains problematic, as it has yet to turn short. It would still take price declines to the $26k level before longer-term momentum would signal capitulation,” he added.

Crude oil price

The global crude oil market has continued to capitalise on recent positive performances as prices recorded growth on Tuesday, 1st June 2021, maintaining their performance from the previous day, as Brent Crude price edged past the $70 mark.

• In the early hours of Wednesday, 2nd June 2021, Brent Crude oil grew by 0.26% to trade at $70.43 as at 4:45am.
• The growth came on the back of the optimism expressed by the Joint Technical Committee of the OPEC+ concerning global oil demand.
• OPEC+ officials met for a virtual meeting on Tuesday and reaffirmed their current plans to gradually increase production in July.
• Bonny Light grew 1.45% to trade at $69.37, while natural gas was trading at $3.083, representing a 0.68% decrease.

External reserve

Nigeria’s external reserve dropped by $13.26 million on Monday, 31st May 2021 to stand at $34.23 billion, representing a 0.04% decline when compared to $34.24 billion recorded as of Friday, 28th May 2021.

• Nigeria’s foreign reserve has lost about $1.14 billion year-to-date, having recorded consecutive declines since 19th April 2021.
• The country’s foreign reserve has continued to witness rapid decline despite the bullish trend recorded in the global oil market.
• This suggests that export earnings from crude oil sales are not increasing in tandem with the growth in crude oil prices. This is attributable to the decline in the demand from India, one of the highest importers of Nigerian crude.