Fun

Venezuelan Currency Plunges Almost 40% Against the US Dollar, Analysts Cite Crypto Drought as Part of the Problem

News Feed - 2022-11-28 06:11:49

Venezuelan Currency Plunges Almost 40% Against the US Dollar, Analysts Cite Crypto Drought as Part of the Problem


The Venezuelan fiat currency, the bolivar, has lost almost 40% in its exchange rate against the U.S. dollar in a month. According to reports, the seasonal payments that the government has to make, and the lack of liquidity of the government to intervene in the currency market are part of the equation leading to this, however, some also include crypto as part of the problem. Venezuelan Currency Takes a Nosedive


The Venezuelan currency, the bolivar, has been losing its value at an alarming rate after enjoying a period of relative stability recently. The currency has lost almost a 40% against the U.S. dollar in parallel markets, with citizens being alarmed at the accelerated pace of the devaluation. According to the popular price index Monitordolar, each dollar had a price of 9.05 bolivares on Oct. 25. The exchange rate increased to 12.63 bolivares per dollar on No. 26.


There are several explanations for this plunge. According to analysts, this nosedive was expected due to the elevated spending that is common in the Christmas season, a consequence of the elevated liquidity put into the market due to the bonuses and payments that the government and other companies deliver to workers.


This is the part of the theory that Venezuelan economist Jose Guerra has formulated on this issue. Guerra stated: Demand for bolivars has fallen due to high inflation so when bolivars go into circulation, the public turns to buy goods and dollars to hedge against inflation and devaluation.


Asdrubal Oliveros, head of Ecoanallitica, an economics research firm, also explains that the Central Bank of Venezuela has not been able to intervene by injecting liquidity into the official exchange market. This is due to the lack of dollar inflows for different causes, including sanctions that difficult the movement of these funds that are mostly collected in cash for the sale of oil. In August, the Venezuelan currency also lost 35% of its value against the dollar in just one week. Crypto’s Influence


However, apart from the usual suspects, Oliveros also believes that there is a crypto element that makes this situation more severe. Oliveros states that most of the parallel currency market, which does not depend on government intervention, was currently being fed by market makers that used cryptocurrency exchanges as a way of injecting these funds into the country.


However, due to the ongoing downtrend that the cryptocurrency market faces, and the lack of confidence in centralized exchanges associated with the downfall of FTX, one of the biggest cryptocurrency exchanges in the world, these market makers have limited their exposure, leaving the market illiquid and contributing to the scarcity of dollars.


The economist expects the exchange rate to keep rising as these problems go bigger in the next few days, qualifying the situation as a “perfect storm” for devaluation to keep growing. Tags in this story Asdrubal Oliveros, Bolivar, Devaluation, dollar injection, ftx, jose guerra, Liquidity, Market Makers, Monitor Dolar, Sanctions, U.S. dollar, Venezuela, venezuela fiat currency


What do you think about the recent plunge of the Venezuelan Bolivar against the U.S. dollar? Tell us in the comments section below. Sergio Goschenko


Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price rise happened during December 2017. Having a computer engineering background, living in Venezuela, and being impacted by the cryptocurrency boom at a social level, he offers a different point of view about crypto success and how it helps the unbanked and underserved. New Naira Banknotes to Make Monetary Policy More Effective — Nigerian Central Bank Governor ECONOMICS | 14 hours ago Report: China Suspected of Stockpiling Gold to ‘Cut Greenback Dependence’ ECONOMICS | 5 days ago


Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleDespite 2 Entities Holding 73% of the FTX Token Supply, FTT Price Still Holds Above $1 per Unit Next articleCoinbase: Institutional Investors Increased Allocations During Crypto Winter, Long-Term Price Outlook Positive Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItOman to Incorporate Real Estate Tokenization in Virtual Assets Regulatory Framework


Real estate tokenization is set to be incorporated into Oman Capital Markets Authority (OCMA)"s virtual asset regulatory framework. According to an advisor with the authority, the tokenizing of real estate will open investment opportunities for local and foreign investors. Real ... read more.Following a Brief Fee Spike, Gas Prices to Move Ethereum Drop 76% in 12 Days Bitcoin ATM Operator Indicted in New York Allegedly Running Illegal Business Attracting Criminals Economist Predicts the Fed"s Response to Inflation Will Push Crypto Higher Ethereum Foundation"s Financial Report Discloses It Holds $1.6 Billion in Assets, 80.5% Held in Ether

News Feed

What does Bitcoin smell like? AI startup wants to ‘teleport’ digital scents
Tristan Greene3 hours agoWhat does Bitcoin smell like? AI startup wants to ‘teleport’ digital scentsThe technology could also help detect diseases such as cancer.1306 Total views5 Total sharesListen to article 0:00Ne
Bitcoin To Blast Off? Trump’s Fury Over Interest Rates Signals Big Move
Este artículo también está disponible en español. Bitcoin experts are buzzing as President-elect Donald Trump lashed out against current Federal Reserve policy, calling i
Binance Lending Adds Bitcoin Cash to Flexible Deposits Letting Users Earn Interest on BCH
Binance Lending Adds Bitcoin Cash to Flexible Deposits Letting Users Earn Interest on BCH Bitcoin cash users now have another venue to earn interest on their digital asset holdin
Atari to Launch a Crypto-Fueled Gaming Platform in the Ethereum Metaverse Decentraland
Atari to Launch a Crypto-Fueled Gaming Platform in the Ethereum Metaverse Decentraland In October 2020, the entertainment software company Atari launched a digit
Crypto Analyst Says Ethereum Will Outperform Bitcoin And Solana, Is $12,000 Possible?
Este artículo también está disponible en español. A top crypto analyst has issued a bold prediction for Ethereum, forecasting it will outperform both Bitcoin and Solana i
UK Police Seize Bitcoin Worth $2.8 Million From Teen Operating Scam Website
UK Police Seize Bitcoin Worth $2.8 Million From Teen Operating Scam Website British police have seized bitcoin worth almost $3 million from a teenager who set up a fake website to
Leading Japanese Online Broker SBI to Pull Out of Russia’s Crypto Mining Sector
Leading Japanese Online Broker SBI to Pull Out of Russia’s Crypto Mining Sector SBI Holdings, the largest online brokerage in Japan, is shutting down its crypto mining business i
Bitcoin, Ethereum Technical Analysis: BTC Above $21,000 as ETH Hits Fresh 2-month High
Bitcoin, Ethereum Technical Analysis: BTC Above $21,000 as ETH Hits Fresh 2-month High Bitcoin surged to a fresh two-month high on Jan. 14, as crypto markets were significantly hig
The Blur Airdrop Unveils NFTFi on CoinEx: The DeFi Platform That’s Taking NFTs to the Next Level
The Blur Airdrop Unveils NFTFi on CoinEx: The DeFi Platform That"s Taking NFTs to the Next Level press release PRESS RELEASE. On February 14, the highly anticipated Blur airdrop was
Analyst Reveals What The Gold Chart Says About The Possibility Of Bitcoin Price Reaching $100,000
Este artículo también está disponible en español. Recent action has seen Bitcoin price retest the $67,000 price level. Particularly, the Bitcoin price declined by about 8
Worldcoin invites devs to build ahead of mainnet launch in 2024
Helen Partz11 hours agoWorldcoin invites devs to build ahead of mainnet launch in 2024With the World Chain developer preview, devs can deploy infrastructure on a “gated mainnet,” as World Chain is skipping a testnet.
Gareth Jenkinson1 hour agoBNB Chain hard fork to improve security and compatibility with EVM chainsBinance’s BNB Chain is set for two upgrades aimed at improving the finality of the network and compatibility with other