Bitcoin fever seems to be losing strength in Venezuela, where there have been fewer movements with the most important cryptocurrency on the market since 2019.
These operations were carried out through Localbitcoin, a trading platform for cryptocurrencies It works with the local currency of each country: in this case, the bolívar. This decline is believed to be caused by the increasing use of the dollar in formal and informal trade in the country.
Bitcoin’s upward curve was paralyzed
Although operations reached record numbers in early 2019 (e.g. 2,487 bitcoins in the first week of February) and even surpassed the United States, This upward curve slowed with increasing foreign exchange.
Hyperinflation made the bolivar the most devalued currency in the worldThis is a reality that the Central Bank of Venezuela itself confirms in numbers and admits in its latest report that prices rose 130,000% in 2018.
Now there is a new record of traded Bolivars in the LocalBitcoins trade every week. According to Coin.Dance, the official daily exchange rate totaled 722,000 million bolivars, which is $ 4,241,901 million, They were traded on LocalBitcoins’ P2P platform between Monday April 20 and Saturday April 25.
The Bolivar is worth nothing in Venezuela
The bolívar, the official currency, is worth nothing. The government has done terrible damage to the economy and the people have fled into the dollar to protect themselves.
The dollar in Venezuela is general. It is available everywhere as a reference or as an intermediate medium. And the entire population is part of the black market for the dollar. Despite the official ban, even the president encourages its use.
With the crisis, most assets lost value, but food did not. So we have two Venezuela. The majority of Venezuela is starving. And Venezuela with dollars that are made up of wealthy merchants, corrupt politicians, remittances and people who somehow receive foreign currency for their work or investments.
Hyperinflation particularly affects the food sector. In fact, it affects everything that is quoted in Bolivar. The country is dollarized and all Venezuelans get up every morning and ask about the price of the dollar in relation to the bolivar. Special pages for price advice have been created. And there are different types of prices.
More chaos after Covid-19
In the midst of the coronavirus pandemic (Covid-19) and the economic chaos in the country, this new type of monetization is increasingly being used with its significant advantages and options for preserving monetary value.
The increase in cryptocurrency production and exchange is due to the Bolivar’s loss of purchasing power, its continued devaluation and galloping inflation.
Venezuelan economic policy has focused on increasing monetary liquidity in order to alleviate the difficult economic situation in which citizens are in quarantine through direct subsidies.
The social isolation needed to fight the epidemic increases the economic crisis through the closure of businesses, closed shops and millions of people in their homes.
Bitcoin as an alternative
Despite the scale of cryptocurrency operations through platforms like LocalBitcoins, the question remains whether Venezuela can be considered a cryptonation, mainly due to the fact that the greatest need among residents is the use of dollars and bolivars for commercial operations.
It is not entirely correct to say that Venezuelans choose Bitcoin to seek refuge. Bitcoin is too risky. The dollar is stable.
Large numbers in local bitcoins are achieved because bitcoin is used as a bridge to get dollars on the black market. What is commonly referred to as Bitcoin dollars. In fact, the dollar and Bitcoin are good friends in Venezuela. They complement each other. Bitcoin in Venezuela is closely linked to the dollar market.
Bitcoin is much more self-control and freedom for this country than currency stability. So It is natural that it is used to cross borders.