Bitcoin Price Hits Insane 1000% Premium in Hyper-Inflated Zimbabwe
Zimbabwes worsening economic conditions have seen the citizens of the Southern Africa republic turn to Bitcoin leading to them paying a premium price on over-the-country crypto trading platform LocalBitcoins.
Currently, there are sellers on the OTC crypto trading platform asking for $104,000 per Bitcoin. With the Bitcoin price hovering below $10,000, it means they are charging a premium of nearly 1,000 percent.
The Bitcoin price premium is coming weeks after the Zimbabwean government reinstated the Zim dollar. At the same time the government also banned the use of foreign currencies in the settlement of domestic transactions.
Earlier this month, after another huge Bitcoin price premium in Zimbabwe had been observed, eToro markets analyst Mati Greenspan argued that the high price was due to the locals trying to get rid of their U.S. dollar holdings after the government reintroduced the Zim dollar. At the time the Bitcoin price premium was observable among sellers who were being paid in the countrys mobile phone payments app EcoCash.
Some crypto sites are reporting a 600% bitcoin premium in Zimbabwe.
This massive markup is actually just a reflection of the black market rate for USD held in EcoCash which have just been rendered virtually worthless by the government.
Full explanation coming in today's daily.
— Mati Greenspan (@MatiGreenspan) July 2, 2019
However, this time round premiums are also being observed among sellers seeking to be paid in global payment platforms such as PayPal and Western Union.
Are Zimbabweans at the mercy of OTC Bitcoin markets?
The high Bitcoin price premium can be attributed not only to the high demand occasioned by the countrys dire economic conditions but also the fact that Zimbabwe currently lacks local cryptocurrency exchanges.
Last year in the first quarter the Reserve Bank of Zimbabwe prohibited banks and other financial institutions from offering their services to cryptocurrency exchanges and traders. This ban has seen Zimbabweans trading Bitcoin on OTC markets having to bypass local banks and turning to foreign payment services providers.
Some of the cryptocurrency exchanges that operated in Zimbabwe before the ban have since then turned their focus on other markets. Golix, for example, took the ban as an opportunity to launch operations in other African countries such as South Africa, Nigeria, Kenya, Tanzania, Uganda, Cameroon and Rwanda.
Venezuela might soon be in good company