Bitcoin volumes in Venezuela continue to climb, but China BTC volume on LocalBitcoins hits 2-year low

No country in Latin America shows the two sides of cryptocurrency better than Venezuela. As the nation has seen its currency rendered valueless amid record, Zimbabwe-style hyperinflation, Venezuelans have turned to digital money as an alternative to the Bolívar.

President Nicolás Maduro and Chinese leader Xi Jinping pictured in 2018.

Even amid persistent blackouts, Venezuela is today one of the top markets for peer-to-peer crypto transactions, according to LocalBitcoins, a popular bitcoin trading platform. Cryptocurrency is a common payment method on the country’s top e-commerce platform, freelancers often price their services in Bitcoin and even brick-and-mortar retailers list their prices in digital money.

Bitcoin has also served Venezuela as a key tool for humanitarian relief.

Venezuela was once one of the wealthiest countries in Latin America, with the highest standard of living on the entire continent. It’s massive oil reserves are the largest in the world, exceeding even those of Saudi Arabia. A resource-rich country Venezuela has fallen into a devastating economic crisis that is reminiscent of the legendary currency collapse of the Weimar Republic. In fact, Venezuela’s currency crisis may be worse.

Bitcoin trading volumes in Venezuela continue to climb

Yesterday, Larry Cermak of The Block tweeted about the rising volumes in Venezuela’s Localbitcoins.com. Venezuela has been buying a lot more Bitcoin than other “at-risk” economies, such as Argentina, Colombia, Turkey, and Iran which have also seen Bitcoin volumes increase as a hedge against runaway inflation.

2019 LocalBitcoins volume:

Venezuela – $305.93M
Colombia – $134.22M
Peru  – $45.54M
Hong Kong  – $21.73M
Chile – $13.84M
Argentina – $11.94M
Iran – $5.81M
Egypt – $1.40M

Source: The Block

Meanwhile, countries like Colombia and Egypt have dropped from 60% to 70% of the Bitcoin transaction volume on LocalBitcoins.

Growth of LocalBitcoins volume in 2019 vs. 2018

Egypt – 69.8%
Colombia – 59.8%
Peru – 47.7%
Argentina – 44.7%
Chile – 36.3%
Venezuela – 33.2%
Hong Kong – (18.5%)
Iran – (52.1%)

Source: The Block

Bitcoin initially made its way to Venezuela through cryptocurrency enthusiasts and miners who were able to secure almost free electricity subsidized by the government. As the currency crisis progressed, mining was actually outlawed for a period, before becoming legalized and sanctioned by Venezuelan authorities who initially opposed cryptocurrencies.

As AZCoin News reported on January 14, President Nicolas Maduro decreed that airlines flying from Caracas must pay for fuel in “Petros”, which he ordered to be more widely used in the cash-strapped South American country.

“I decree the sale of all fuel sold by the PDVSA for planes operating international routes be made in Petros from now on,” the President told the all-powerful Assembly, created by Maduro himself to sideline the opposition-controlled National Assembly.

President Nicolas Maduro also decreed the mandatory use of the petro to pay for state document services including passports.

China Bitcoin Volume on LocalBitcoins Hits 2-Year Low

LocalBitcoins is showing its lowest volume in China in two years. Volume for the popular marketplace hovered at around 4.5 million yuan for the week of Jan 25.  its lowest weekly volume in two years, with a trading volume of around $4.5 million yuan, or about $6.5 million.

Image via LocalBitcoins

It is quite difficult to ascertain the specific reasons as to why volumes have dropped off. Primarily, China has shown an increasingly lenient stance towards digital assets over the past year, especially considering that it banned ICOs in 2017, which proved to be quite ineffective. Even more recently, China shut down over 175 cryptocurrency exchanges.

LocalBitcoins, the prominent P2P marketplace for digital assets saw its highest volumes during late 2017 and early 2018 when Bitcoin reached its all-time high price ($20k). On average over the past year, volumes have been steady between 20-30 million yuan per week.

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