Cryptocurrency and Other Financial Markets in Nigeria

Abstract

The global financial system is no doubt embracing the current transition from physical currency to almost virtual currencies through the medium of technology. This tidal wave given rise to virtual currency. Cryptocurrency has been defined as an electronic career high device that uses funds to make note of buying and selling duties and is open to all brokers. The major aim of the study is to examine the integration between the cryptocurrency market and other markets in Africa specifically Nigeria. Secondary source of data was used in this research work. On the one hand, the time series evaluated in this paper consists of the standardized residuals of eleven digital coins by market valuation. The selected cryptocurrencies are Bitcoin, Ethereum, Tether, Bitcoin Cash, Bitcoin SV, XRP, Binance, EOS, Tezos, Cardano, Litecoin, Stellar. On the other hand, data on commodity market of income generation components extends from November 20, 2019 to June 30, 2021. As a result, the nonlinear ARDL cointegration approach (NARDL) was used in this study to predict asymmetries in the short and long run. This methodology is used to test whether the time series are discontinuously associated. It also looks for both short- and long-term inhomogeneity by decomposing the positive and undesirable provisional amounts of the explanatory variables. The results of the analysis confirm that Oil price show the greatest connection with the returns of the cryptocurrencies analyzed. In addition, both short-term and long- term results show a greater interdependence between income generation components and cryptocurrencies. It is therefore noted that eliminating the currency would be seen as unreasonable and unworthy of a country that seeks to promote domestic innovation. Hence, Central Bank of Nigeria should state a proper regulatory action Keywords: Cryptocurrency, Bitcoin, Virtual Currency, Stock Market, Oil Price