Bitcoin and the Venezuela Factor

Bitcoin’s price saw renewed consolidation on Thursday, though recent activity in the cryptocurrency market suggests that a re-test of a key psychological level is likely in the near term. Although bitcoin has long exerted a gravitational pull on the broader market, the recent upsurge among competitor coins suggests that another breakout is likely.

BTC/USD Update

On Thursday, the bitcoin price averaged $3,901.67 on major exchanges, according to CoinMarketCap data. The average price was virtually unchanged compared with 24 hours ago.

Via Bitstamp, bitcoin’s price was last seen at $3,859.91, where it was up 0.2%. With the exception of Bitfinex, where bitcoin is usually traded at a large premium, most major exchanges printed a similar value.

The bulls are eyeing an immediate re-test of $4,000, a psychologically significant level that, if breached, could pave the way to the December high north of $4,200. Bitcoin tested that region late last month but failed to sustain momentum.

Bitcoin’s trade volumes exceeded $9.2 billion on Thursday, far higher than the 2019 average. Exchange volumes for all cryptocurrencies exceeded $30.6 billion, based on latest available data.

At current values, bitcoin has a total market capitalization of $68.7 billion. Its dominance rate has fallen back to 51.5% from the most recent high near 52.6%.

Bitcoin and the Venezuela Factor

Bitcoin has long exerted a gravitational pull on the broader cryptocurrency market. Now, it appears that the major altcoins are having a similar effect on bitcoin. Case in point: Litecoin (LTC) has gained a whopping 86% since the beginning of the year while Binance Coin (BNB) is on track to triple in value so far this year. As we reported, Litecoin’s sudden breakout in early February had a direct influence on bitcoin.

Cryptocurrencies like bitcoin and Litecoin have experienced a massive surge in volume over the past two months. It’s not just that trade volumes have risen -they have consistently remained at higher levels. This has allowed markets to engineer a sustained rally over the past month or so.

Venezuela’s socialist nightmare is also having a direct impact on cryptocurrency demand. As Forbes recently reported, the crisis-hit nation adopts a new cryptocurrency remittance service that allows citizens to receive bitcoin and litecoin. The remittance service is supposed to “guarantee financial inclusion along with the social protection of the people of Venezuela” at a time when economic ruin and hyperinflation pose an existential crisis to the nation as a whole.

Services such as LocalBitcoins have become more popular in the country as people look to circumvent international sanctions and a collapsing local currency. As per CoinDance data, there were more than 25 billion bolivars traded on LocalBitcoins last week.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi