Following the spread of coronavirus across the world, President Maduro has ordered national quarantine in Venezuela. Only 33 cases of COVID-19 were reported to have been confirmed in the South American nation. Irrespective of the number, the President decided on March 17 to put the whole country in quarantine.
The emergency action taken by President Maduro’s administration will prevent Venezuela’s health system from being flooded with the rapid spread of infection. In compliance with the decree, the banks in Venezuela have been closed for an indefinite period of time. However, even though this decision crippled the country’s banking system, it spurred bitcoin trading on peer-to-peer trading platforms.
Venezuelans not worried over banking closure
Venezuelans do not seem to be very concerned about the closure of the banking system. The country has been through severe economic conditions, and cash shortages are not a rare occurrence. The lack of technological infrastructure and dependence on the US dollar has already begun to push people away from traditional banking.
Venezuela’s informal economy is thriving through barter trade, gold, cash, and digital currencies are the latest addition. Peer-to-peer exchange platform, LocalBitcoins has endured its largest trading activity this year as a result of growing interest in digital currencies. At the end of February, the traded volume of bitcoin was at 491 BTC which has eventually hiked to 540 BTC. Additionally, the trades for bitcoin against the U.S. dollar stood at 479 BTC.
Moving forward, the economic impacts of COVID-19 appear to be triggering a massive adoption of digital currencies across South America. LocalBitcoins have increased by more than 30% in Peru and approximately 15% in Colombia over the last seven days.The last time we saw such figures was back in 2019 when the price of bitcoin escalated after a long period of crypto winter.
Coronavirus threatens Venezuela’s Petro program
President Maduro vowed back in January to make Petro cryptocurrency a success. Biopago (Petro’s payment system) then temporarily suspended service delivery to the public. However, the President ordered all state services to be priced and paid for the use of petro cryptocurrency.
In fact, some Venezuelan crude oil buyers have stopped doing business with Venezuela. This is because the port officials of the South African nation began demanding port fees in the controversial Petro cryptocurrency.
The threat posed by the spread of COVID-19 pandemic appears to have thrown cold water on President Maduro’s endeavor to impel the adoption of petro cryptocurrency in Venezuela. The last major activity by the president to stir oil-backed Petro use was back in January. Then, Maduro launched Petro-powered casinos from which health and education programs will be funded.
In addition, the announcement of the casinos came after President Maduro ordered the sale of airline fuel; for international flights to be sanctioned by the use of petro. Despite the government’s efforts to drive the adoption of petro in the country, the Venezuelans were not convinced by the idea of petro. A couple of weeks ago, Venezuelans sold the oil-backed petro digital currency at half the official set price of $60.