Assessing the Impact of Bitcoin Prices on Nigeria's Exchange Rate Dynamics: A SARIMA Time Series Approach

Cryptocurrencies, particularly Bitcoin, have emerged as disruptive financial instruments with significant implications for global and national economies. In Nigeria, where exchange rate volatility poses persistent challenges, understanding the influence of Bitcoin prices on exchange rate dynamics is crucial for informed policy and investment decisions. This study aims to assess the impact of Bitcoin prices on the Nigerian Naira using a Seasonal Autoregressive Integrated Moving Average (SARIMA) time series approach. Monthly data covering June 2021 to September 2021 were obtained from the Luno Exchange and analysed using R statistical software. The SARIMA model, specified as (2, 1, 2) (2, 1, 1)12, was selected after rigorous diagnostic checks, including autocorrelation and partial autocorrelation analysis, residual tests, and Akaike Information Criterion (AIC) comparisons. Results reveal notable seasonality and irregular fluctuations in Bitcoin-to-Naira exchange rates, with forecasts indicating a steady upward trend in Bitcoin prices. These findings highlight Bitcoin's potential role in facilitating international transactions, reducing reliance on intermediaries, and fostering a savings culture, while also underscoring the risks associated with volatility and regulatory uncertainty. The study concludes that Bitcoin adoption could enhance Nigeria's economic resilience and financial inclusion if supported by clear regulatory frameworks and public awareness initiatives. Overall, the research demonstrates the relevance of SARIMA modelling in capturing cryptocurrency price dynamics and provides insights for policymakers, investors, and stakeholders navigating Nigeria's evolving financial landscape.