The week just ended in Venezuela was the one with the highest trading volumes ever of bolivars with bitcoins on the LocalBitcoins platform.
In fact, there were more than 363 billion bolivars (ESR) traded for bitcoin, while the previous record, set the week before, had reached 263 billion. The increase was therefore 38% in just seven days, although this is largely due to the powerful inflationary effect of the Venezuelan fiat currency.
Checking the counter value in BTC, it turns out that only 638 bitcoins were traded during the recent week, a volume of just over 5 million dollars, as opposed to 580 in the previous week.
But it wasn’t only the bolivar hyperinflation that contributed to the new record: the demand for BTC was also high.
This is made clear by the fact that the dollar price of BTC in Venezuela on LocalBitcoins is currently about $1,300 higher than the global average market price, reaching about $9,400 at current exchange rates.
In addition, the offer of bitcoin in exchange for bolivar is very limited, so much so that the only seller that to date would be willing to sell an entire BTC in exchange for VES on LocalBitcoins requests an equivalent in bolivar of more than $11,000 at current exchange rates.
Over the last 12 months, bolivar trading volumes on LocalBitcoins have increased by 2,492%, from 13.7 billion VES at the beginning of January 2019 to the current 363 billion.
Whereas volumes in BTC over the same period have fallen from 1,747 to 638, partly due to the significant increase in the US dollar price of bitcoin.
It is clear that it is precisely the powerful hyperinflationary pressure on the bolivar that drives Venezuelans to get rid of it in exchange for bitcoin, so much so that more and more are those who are willing to do so, while those who are willing to accept VES in exchange for BTC are decreasing.
This creates an imbalance between supply and demand that results in a price of BTC in dollars significantly higher than the global average.
Finally, it should be noted that, as of October 2019, overall BTC trading volumes on LocalBitcoins have fallen significantly due to the tightening of policies on anonymity, hence the increase in bolivar trading in this respect is even more significant.