Cryptocurrency Investment and Portfolio Diversification Among Nigerian Retail Investors

Cryptocurrency assets have attracted increasing interest from Nigerian retail investors seeking diversification, hedge against inflation, and access to global markets beyond the constraints of the foreign exchange system. This study examines cryptocurrency investment behaviour and its role in portfolio diversification among retail investors in Nigeria, with fieldwork conducted in Lagos, Port Harcourt, and Abuja representing the South West, South South, and North Central zones respectively. Using a cross-sectional survey design, data are collected from 250 active cryptocurrency investors aged 18 to 45 through structured online and in-person questionnaires. The study assesses investment motivations, portfolio allocation percentages, risk perception, and awareness of regulatory guidance from the Securities and Exchange Commission and the Central Bank of Nigeria. Data are analysed using descriptive statistics, cluster analysis to identify investor typologies, and regression to identify predictors of cryptocurrency allocation size. The theoretical framework draws on modern portfolio theory and behavioural finance, particularly prospect theory, to explain investment allocation patterns in a high-volatility asset class. The study evaluates whether cryptocurrency investors in Nigeria perceive digital assets as substitutes or complements to traditional investment products such as equities and treasury bills. Recent literature highlights the paradox of a central bank prohibition on bank-facilitated crypto trading coexisting with one of the world's highest per-capita cryptocurrency transaction volumes. Findings carry implications for the Securities and Exchange Commission's digital asset regulatory framework and for financial advisors serving the retail investor market. Keywords: cryptocurrency, portfolio diversification, retail investors, Nigeria, digital assets