Amidst Economic Collapse Bitcoin Trading Reaches All-Time High in Venezuela

According to a tech news outlet, in Venezuela, the trading volumes of Bitcoin have reached a new and all-time high. Amidst the massive hyperinflation and an ongoing presidential crisis, Bitcoin’s weekly trading volume reached above 2,000 BTC (about $6.8 million) on the peer-to-peer exchange that LocalBitcoins have reported during the end of the first week of February.

The recorded trade volumes on LocalBitcoins are just a fraction of the overall estimated Bitcoin trading by Venezuelans. According to the TrustNodes reports, a large amount of trading has been taking place on the centralized exchanges located in various neighboring countries, such as Brazil and Colombia. In such scenarios, the total value of Bitcoin trading volumes by Venezuelans is so difficult to estimate since trades are often made in local currencies of the neighboring countries.

However, the trading volumes on LocalBitcoins have also seen an increase in a spike in the country of Colombia, with the two countries together accounting for 85 percent of trading volumes on the p2p exchange in Latin America, as several media websites reported on 5th of February. During the first five weeks this year, 2019, Venezuela has reportedly seen 8571 transactions, while Colombia saw 1709 transactions.

According to TrustNodes, the trading volume on LocalBitcoins in Venezuela has seen an over four-fold increase since summer 2018, while the inflation of the local fiat currency, the Venezuelan Bolivar reached one million percent.

Earlier in 2018, the IMF (International Monetary Fund) had made several reports that the inflation rate in Venezuela could potentially reach ten million percent.

Venezuela despite having the largest oil reserves in the world has witnessed its economy fall by 47 percent since the end of 2013. The critical economic situation in the country has been worsened by the sanctions imposed by the United States of America adopted earlier in 2017, which also targeted the regime of Nicolas Maduro, the president of Venezuela. Earlier in January, the United States had announced additional sanctions against the country’s state-owned oil company, Petróleos de Venezuela, S.A. (PDVSA).

The tension in the country has seen a significant increase by an ongoing presidential economic crisis since January, when the country’s majority opposition National Assembly declared Maduro’s May 2018 re-election invalid. Earlier this month, many cryptocurrency websites reported that Juan Guaido is currently the self-proclaimed president of the country, and is supported by many local and international leaders.

On 31st January, Venezuela officially adopted a new bill on crypto regulation that introduced the concept of a sovereign crypto asset, which represents any currency issued in Venezuela and authorized by the government. The bill also lists required licenses for mining and crypto exchanges businesses and introduces fines for unlicensed activities.

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