The day when U.S. stocks tumble the most since February Venezuela posted its largest-ever Bitcoin trading volumes.
Last week a risk-off tone gripped financial markets, roiling technology and industrial shares a broad selloff took the S&P 500 to the lowest in three months, the Dow Jones Industrial Average plunged as much as 836 points and the Nasdaq 100 Index tumbled more than 4 percent for its worst day in seven years. Down in Venezuela on the other hand we saw new records in Bitcoin trading volumes. Why?
In fact, last week Venezuela volumes in Bitcoin increased the most since records began in 2013, reaching 7.1 Million in 7 Days. Traders continue to turn to cryptocurrency in Venezuela to circumvent the government’s increasing stranglehold on the economy and rampant hyperinflation which persists despite a currency redenomination in August. The circumstance reminds a sentence from “The Bitcoin Standard “ written by Saifedean Ammous:
“People’s choices are subjective, and so there is no “right” and “wrong” choice of money. There are, however, consequences to choices”
The consequence for Venezuelans to choose petros as their currency, will result in losing their wealth quickly. Because of the hyperinflation recorded, the easy money will bring, and probably already did, poverty to all the holders. An example could be the fact that the price of a new passport will be 2 petros (7200 sovereign bolivars, currently $115) — roughly four times the national minimum wage. Extensions will cost 1 petro.
I like to call this the easy money trap: anything used as a store of value will have its supply increased, and anything whose supply can be easily increased will destroy the wealth of those who used it as a store of value