Nigeria’s regulators and crypto market operators have renewed warnings to investors after a sharp selloff pushed Bitcoin briefly below the $88,000 mark and dragged Ethereum under the psychologically important $3,000 level, underscoring the volatility risks that authorities have long flagged.
The broader crypto market shed more than three percent in value over the past 24 hours as selling pressure intensified across major sectors. Bitcoin fell about four percent before stabilising near $89,000, while Ethereum underperformed, sliding over seven percent to break below $3,000.
Losses were most pronounced in the centralised finance (CeFi) segment, which dropped just over five percent, according to data from SoSoValue, with weakness also spreading across DeFi, Layer-1, Layer-2, meme and real-world asset tokens.
The market downturn coincided with renewed institutional caution. Spot Bitcoin and Ethereum exchange-traded funds (ETFs) recorded combined net outflows of about $713 million on January 20, reflecting a risk-off stance among large investors.
Bitcoin spot ETFs saw $483 million in net redemptions, while Ethereum spot ETFs posted $230 million in outflows. XRP spot ETFs also remained under pressure, logging more than $53 million in net outflows. Solana was the lone outlier, attracting modest inflows of just over $3 million.
Investor sentiment deteriorated sharply alongside the selloff. The Crypto Fear & Greed Index fell to 24, a level classified as “extreme fear,” highlighting growing anxiety among traders amid heightened volatility.
Against this backdrop, Nigerian authorities and industry players said the latest market moves validate long-standing warnings about crypto’s risk profile.
The Central Bank of Nigeria (CBN) has consistently cautioned that cryptocurrencies are not legal tender and are prone to extreme price swings, noting that digital assets are not backed by government guarantees or physical commodities and can suffer sudden, steep losses.
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Similarly, the Securities and Exchange Commission (SEC) has repeatedly described crypto-assets as high-risk investments, urging Nigerians to exercise caution, conduct due diligence and only commit funds they can afford to lose. The regulator has also emphasised the need for stronger investor protection frameworks as digital assets gain traction among retail users.
SEC advised Nigerians to treat cryptocurrencies as speculative assets rather than guaranteed stores of value, committing only funds they can afford to lose. “It is importance you understand price volatility, liquidity risks and sudden drawdowns, particularly during global selloffs when prices can move sharply within hours.
“Nigerians should also prioritise due diligence and platform safety. Verify the legitimacy of trading platforms, avoid unregistered investment schemes promising fixed or unusually high returns, and remain cautious of social-media-driven hype. Diversify portfolios instead of concentrating exposure in a single asset or token, while using basic risk tools such as position sizing and stop-loss limits to manage downside risk,” SEC stated.
Market operators say education, rather than speculation, is becoming increasingly urgent.
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Owenize Odia, general manager for Africa at Blockchain.com, told BusinessDay that the company is intensifying efforts to educate Nigerian users about the realities of crypto investing, especially volatility.
“Crypto assets, apart from stablecoins, are inherently volatile. It is a volatile asset class, and people need to understand what they are going into,” Odia said.
He disclosed plans for a regional education initiative involving conferences across Nigeria’s geopolitical zones, aimed at reaching professionals, entrepreneurs and older users beyond the typical young, tech-savvy demographic.
“Media engagement is a key part of that effort,” Odia added, noting that informed users are better positioned to manage risk and avoid losses during sharp market swings.
Victor Oluwafemi Ajayi, finance expert, urged strong regulation and digital literacy as Nigeria explores the crypto economy amid economic volatility.
Ajayi emphasized that crypto’s price instability poses risks to investor confidence, calling for education to mitigate losses in a market prone to rapid changes.
He urged Nigerians to prioritize digital literacy through workshops and resources to understand market dynamics and volatility indicators like price charts.
“Diversify across asset classes, including stablecoins for short-term holdings, to reduce exposure to volatile cryptos. Engage in community discussions and follow verified experts for timely insights on market trends,” he advised.
The renewed warnings come as crypto adoption in Nigeria remains high, driven by currency pressures, inflation and the search for alternative stores of value. However, regulators and operators alike stress that these macro factors do not eliminate the fundamental risks associated with unregulated and highly volatile digital assets.
As the latest selloff shows, stakeholders say, price rallies can quickly reverse, leaving poorly informed investors exposed to significant losses in a market where fear can return just as fast as optimism.
