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The recent Central Bank of Egypt’s warning on cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) has not deterred investors in the country from investing in the asset class. Recent data shows that crypto trading volumes on P2P platforms in Egypt actually soared in the first quarter of 2021.
A market report by Localbitcoins revealed that crypto trading weekly volumes averaged $205,000 during the first three months of 2021, according to Bitcoin.com. P2P data also revealed that traders under the age of 34 are the main drivers of the recent surge of crypto market activity.
However, buying crypto in Egypt is not cheap as buyers often have to pay a premium charged on top of the digital currency’s spot price. For example, while Bitcoin was trading just under $57,000 on March 16, 2021, in most international exchanges, BTC was trading at $64,000 in Egypt.
Egyptian traders are likely “looking for additional sources of income (either through) trading or hodling bitcoin,” which could explain why cryptos remain popular in the country despite the central bank warning and the hefty premium, according to a video shared by a P2P platform. Cryptocurrencies could be a practical alternative for those who have no access to traditional financial services considering that around 67 percent of Egypt’s adult population are still unbanked.
The Central Bank of Egypt issued a warning that aired its concerns about crypto trading. The monetary authority pointed out that digital assets such as Bitcoin (BTC) are highly speculative and, therefore, volatile.
“Cryptocurrencies are typically characterized by fluctuations and significant price volatility; as their global speculations are completely unregulated, a fact that makes investments in them quite risky and highly speculative, and are likely to lead to sudden losses of their whole value,” the CBE wrote.
The CBE also pointed out cryptos’ are not guaranteed by any government. “It is worthy to note that cryptocurrencies are not issued by any central bank, or any official central issuing authority that can be held accountable,” the monetary authority added. “Moreover, cryptocurrencies are not backed by any tangible assets and are not supervised by any regulators worldwide, and consequently they lack the official governmental guarantee and support enjoyed by the other official currencies issued by central banks.”
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