Today, I will share with you how you can hedge against naira depreciation with cryptocurrency.

Anyone living in Nigeria presently (Oct. 2023) can attest to the fact that holding naira now is equivalent to having little or no money at all.

The value keeps going down by the day, but you can do yourself some good and hedge against it with crypto.

Want to know how?

Read this post to the end.

What is Naira Depreciation?

Currency depreciation occurs when a nation’s currency loses value relative to other global currencies.

This depreciation can have significant ramifications, particularly in the case of Nigeria, where the Naira serves as the cornerstone of its largest economy.

Since the beginning of 2023, the Naira has depreciated by approximately 71.3%, from 749.7NGN per dollar in January 2023 to 1,284NGN per dollar as of press time (Oct. 2023).

This has resulted in an increase in the price of commodities and services.

There is a deodorant I buy every month, but for some time now, whenever I go to buy it, I notice an additional N100, N200, N300, or N500 to its price.

And not just this deodorant but other items as well.

I’m sure you’re experiencing the same if you live in Nigeria.

And that’s all thanks to the naira depreciation.

This has led to a high cost of living and significantly poor returns on naira investments.

But the question is, how can Nigerians hedge against naira devaluation?

Check the section below.

How To Hedge Against The Naira With Cryptocurrency

I don’t know the ultimate way, but I can tell you that cryptocurrencies can come to the rescue.

Because within the same year that the naira dropped in value, cryptocurrencies have rewarded investors big time.

For example, those who bought some Bitcoin at the start of the year are now in 65% profit.

Cool, right?

Let’s look at three ways you can use cryptocurrencies to hedge against naira depreciation.

Number one is Crypto Trading.

Crypto Trading is simply buying cryptocurrencies at a low price and selling them at a higher price to make profits.

There are different ways to achieve this, like spot trading, futures trading, options, derivatives, etc.

But the thing with trading is that it is risky. You can lose money here.

You have to acquire trading skills to use this method, and it will cost you time, patience, practice, and consistency.

I’ll tell you the easiest way to go about crypto trading towards the end of this post.

The second one is Crypto Hodling

Here, we’re looking at long-term crypto investments. 

You buy a coin that you’re bullish about and hold it for a long term without selling.

Then, after many months, when the crypto must have appreciated highly in value, you sell it and bag your profits.

It is a stress-free method, but it also comes with risk because the coin you bought into might crash.

The skills you need here include:

• Ability to select the right crypto to invest 
• Ability to keep your crypto safe, and
• Ability to know when to sell. 

I use this method a lot for my long-term investments – DCA through consolidation season and sell during the bull season. 

In DCA, i.e., Dollar Cost Averaging, you buy a bit of the asset periodically for months and sell when the asset skyrockets.

You can also check out this video of how to do this with Bitcoin, netting a profit of 14 million naira from just 20,000 naira monthly.

Let’s look at the 3rd method to hedge against Naira devaluation.

The third method is DeFi 

DeFi is a special aspect of crypto that rewards people for saving coins.

Think of it as the regular bank where you open a savings account and earn interest for putting your money there.

Only that, in DeFi, the interest rates are higher.

While a high-interest savings account offers an average of 3% APY, you can earn up to 8% APY and more in DeFi.

Also, the platforms here are decentralized, unlike traditional banks, which governments control.

Defi is a double better option because first, you will convert your naira to USDT, which is already a hedge on its own then you are putting it to work to earn interest on it. 

But there is a caveat here:

Crypto has its risks.

While it may be an alternative option to naira investments because the returns are higher and they happen fast, crypto is very volatile.

In other words, as quickly as crypto rises in value, it can drop quickly, and you may lose money.

That is why you need the education to know how it is done. 

In our crypto trading school, Afibie, I teach all the strategies professional traders use to know when to buy and sell their crypto for profit.

It is easy to understand, be you a newbie or a pro. 

You can start by joining our Telegram channel, where we hold live sessions and give free trading signals.

Share this post on your favorite social media platform to help inform other Nigerians.

See you in my next post.