Nigeria's central bank restrictions on cryptocurrencies are still affecting exchanges operating in the African nation.

On Friday, bitcoin was trading at a 46% premium on Luno in Nigeria, meaning the price of one bitcoin on the exchange was much higher than its average price on other major exchanges of around $48,000 at the time. This is up from a 38% premium earlier in the week. Luno is a subsidiary of Digital Currency Group, CoinDesk's parent company.

Earlier this month, Nigeria’s central bank (CBN) prohibited local financial institutions from servicing crypto firms. The exchange said it was experiencing a drop in liquidity as a result of the ban. Marius Reitz, Luno's general manager for Africa, told CoinDesk that while liquidity issues don’t have a "yes or no'' answer, "the letter from the [Central Bank of Nigeria] caused a market shock."

"Luno still has liquidity, but it is a third of what it was previously," Reitz said.

Liquidity typically indicates a firm’s ability to pay off its short-term debt obligations. But in the context of cryptocurrency exchanges, liquidity reflects the ease with which a crypto asset can be converted to cash or other cryptocurrencies without influencing the asset’s price too much. Low liquidity makes this conversion more difficult, and drives the asset price up. 

Typically, bitcoin prices on each exchange differs slightly depending on the exchange’s liquidity, as well as the fact that bitcoin, being a decentralized asset, has no standardized pricing.

Still, the price on Luno far exceeds what a typical range of prices might look like.

Although the ban wasn’t new, the central bank nonetheless ordered all local banks to shut down accounts tied to crypto firms. In response to the order, Binance Nigeria suspended Nigerian naira deposits on the platform, while Luno halted both withdrawals and deposits. 

Luno is still not able to process deposits and withdrawals, Reitz said. 

He added that immediately following the order, people were trying to sell bitcoin back to naira so they could withdraw funds to their personal accounts, and the central bank order led to lower demand for bitcoin. In fact, unable to maintain accounts with traditional exchanges, Nigerian crypto users began turning to peer-to-peer trading platforms. 

“Now, as the price of bitcoin reaches new highs, because there aren't as many people buying [or] selling bitcoin in Nigeria as there were before, it can lead to periods of low liquidity causing price spikes and dips,” Reitz said in an email to CoinDesk. 

Bitcoin is already trading at a slight premium on some exchanges in Nigeria, where the informal dollar rate and inflation can influence the prices. On Friday, the official U.S. dollar to naira exchange rate published by the Central Bank of Nigeria was 379 naira per $1. Meanwhile, bitcoin prices on a peer-to-peer platform Paxful reflected the informal dollar exchange rate in Nigeria: 475 naira for $1. On Luno, bitcoin was listed at around 33,000,000 naira, which meant $1 was worth around 690 naira. One Twitter user pointed out that one dollar was going for 700 naira on Feb. 20 on the platform. In other words, bitcoin could cost a user between $45,866 and $69,000 in Nigeria at the moment. 

Another user (@MarufLawal) took to Twitter to raise his concerns about Luno’s high premium, going as far as to accuse the platform of manipulating prices. 

“The current rate of [b]itcoin and all crypto on your platform doesn’t reflect reality,” the user said. 

Luno doesn’t set the price of bitcoin or any cryptocurrencies available on the platform, Reitz said.