Digital Beans #28 The curious case of Venezuelan economy

Hey there everyone! 👋 This is Shivam. I bring to you the 28th weekly edition of Digital Beans. This is an effort through which I try to share my thoughts on the Digital Assets Industry and Business Models in the space. Your 0 to 1 guide for Digital Assets Industry

Read time - 4 mins

In this edition, the article I explore is titled "The curious case of Venezuelan economy " Hope you enjoy it.

Spill the beans (Explain to me like a 5 year old) 

Venezuelan stock market has been pumping for the last year

But here is the ground reality, it is not helping the economy in real terms. People are actually getting poorer!!

1} Here is a chart from June 2022-23, a detailed version of the Stock Market Index

You may ask "So what" The consultant in me is bound to answer

Now, look at the inflation rates, it is one if the highest in the world right now.

Highest Inflation rates across :

1. Venezuela: 429%

2. Lebanon: 260%

3. Syria: 139%

4. Argentina: 114%

Now, this is where things get interesting, want to guess what is happening?

To answer that, Let's take a look at the money supply numbers,

Venezuelan central bank has been printing tons of money to flood the system. Inflation is a natural consequence, this has a direct implication on something else - “Purchasing power”

2} The currency has depreciated in value.

If you owned a fortune that is going to be irrelevant in the next year. And you cannot do anything, the system is printing money and is against you. As you can see below in the past one year, the value of 1USD in terms of Venezuelan Bolivar has increased.

This means if you owned let’s say 100 VES in 2022, now what you can get for those 100 VES is way less.

This brings me to the first tweet ..... Why is the stock market pumping?

It is because of "Debasement". More money supply means value of currency decreases so stocks which are a store of value appreciate relative to currency. It's the denominator (currency value) that is decreasing

3} Venezuela might go the crypto route:

Venezuela recently launched the national Venezuelan cryptocurrency Petro, officially El Petro, which has garnered about $735 million during the first day of the ICO launch.

Despite the apparent success, the future of the Venezuelan cryptocurrency is unpredictable, as some countries, such as the USA, have already banned the use of Petro.

Interesting to see how Venezuela comes out of this.

State of Crypto affairs - A quick look at the market 

The global cryptocurrency market cap today: $1.24 Trillion

Weekly change: -0.01% | Yearly change: 35.77%

Bitcoin (BTC) is the largest cryptocurrency with a market cap of $593 Billion.

Weekly change: -0.42% | YTD change: 83.61%

Another important metric is Bitcoin dominance which can be used as a rough indicator of the relative strength of Bitcoin versus other cryptocurrencies. A high Bitcoin dominance means that Bitcoin has a large market share and is potentially more influential in the overall cryptocurrency market and vice-versa.

Bitcoin dominance: Current Year: 49.84% | Last year (July 2022): 43.10%

Greed and fear index 

The market sentiment has been back to high greed levels now post Bitcoin pumping in the last week as the likes of Blackrock filed for Bitcoin Spot ETF (bullish news)

Note: The data used is based on metrics like Volatility, Surveys, Bitcoin Dominance, Social and Google Trends. Source: Coinstats

Is ETH ultrasound money? 

Let's have a look at Ethereum supply changes post its merge to a PoS blockchain from PoW.

The significance of the charts - understand how the supply of Ethereum is decreasing post the merge, which means “deflationary economics” for the Blockchain

Supply change since merge POS -282,517 ETH

The graph highlights POS vs POW issuance since the merge. Impressive numbers, look super bullish for ETH long term given the supply of ETH is not growing as before

What's brewing today? Bringing fresh beans to you: 

Coinbase Will Be Surveillance Partner for Fidelity, Other Bitcoin ETFs, Refiled Applications Say Cboe's BZX Exchange named crypto exchange Coinbase as the market for its surveillance-sharing agreement when it refiled its spot bitcoin exchange-traded (ETF) fund applications for several would-be bitcoin ETF issuers on Friday.

Applied Digital Stock Surges 12% After Announcing Its Third AI Deal Under the partnership, Applied Digital's AI cloud service will use supercomputers designed by Hewlett Packard Enterprises (HEP) and built using NVIDIA H100 graphics processing units (GPUs)

'Rate Limit Exceeded': Elon Musk Riles Twitter Users With Latest Clampdown Twitter CEO Elon Musk announced Saturday that the blue bird app is taking steps to limit verified accounts to reading 6,000 posts daily, while unverified accounts and new unverified accounts are being capped daily at 600 and 300 respectively.

Whats meme-ing? Better make sure this is fun

And now the funny part,

What did you think of today's edition?  

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research