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

Bitcoin (BTC) trading volumes in Venezuela have reached a new all-time high amidst massive hyperinflation and an ongoing presidential crisis, tech news outlet TrustNodes reports Feb. 6.

Bitcoin weekly trading volumes reached above 2,000 BTC (about $6.8 million) on peer-to-peer (p2p) exchange LocalBitcoins during the week ending Feb. 2.

Venezuela LocalBitcoins Weekly Trade Volumes in BTC. Source: Coin.Dance

The recorded trade volumes on LocalBitcoins are just a fraction of overall estimated Bitcoin trading by Venezuelans. As TrustNodes reports, a large amount of trading is taking place on centralized exchanges located in neighboring countries, such as Colombia and Brazil.

In such cases, the total value of Bitcoin trading volumes by Venezuelans is difficult to estimate since trades are often made in local currencies of the neighboring countries.

Trading volumes on LocalBitcoins have also seen a spike in Colombia, with the two countries together accounting for 85 percent of trading volumes on the p2p exchange in Latin America, as Cointelegraph en Español reported Feb. 5. During the first five weeks of 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, has reached one million percent.

As the International Monetary Fund (IMF) predicted earlier in 2018, the inflation rate in Venezuela could potentially reach ten million percent this year.

Despite having the largest oil reserves in the world, Venezuela’s economy has reportedly fallen by 47 percent since the end of 2013. The economic situation in the country was worsened by the sanctions by the United States adopted in 2017, which targeted the regime of Venezuelan president Nicolás Maduro. Last month, the U.S. announced additional sanctions against the country’s state-owned oil company, PDVSA.

The tension in the country has been increased by an ongoing presidential crisis since last month, when the country’s majority opposition National Assembly declared Maduro’s May 2018 re-election invalid. As Cointelegraph reported earlier this month, Juan Guaido is currently the self-proclaimed president of the country, and is supported by many local and international leaders.

On Jan. 31, Venezuela officially adopted a new bill on crypto regulation that introduces 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.