Venezuelan Inflation Reaches 300%, a Bath of Reality for the National Economy

Audy Castañeda
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<strong>Venezuelan Inflation Reaches 300%, a Bath of Reality for the National Economy</strong>

Venezuela “is trapped in high monthly inflation rates,” explains the Venezuelan economist Daniel Cadenas. Annualized inflation hit 359%, according to Bloomberg.

The world is experiencing a generalized inflationary crisis. Virtually all countries from Canada to Patagonia to the Nordics are reporting the highest inflation rates in their recent history.

In the midst of all this, there was a country that, surprisingly, had been left out of this dynamic: Venezuela. The country that a few years ago made headlines for breaking historical inflation records and was now experiencing a period of calm after years of economic and humanitarian crisis.

Apparent “Improvement” of the Venezuelan Economy

So much was the optimism that the government of Nicolas Maduro has been betting for months on a new narrative in which its flag is that the Venezuelan economy is “improving” in the midst of a complicated situation worldwide.

But this fantasy did not last long. The Venezuelan economy has already begun to show signs that it retains many of its previous ills, one of which is inflation, which recently reached an accumulated annual rate of 359% after three months of accelerated growth.

These data are collected by Bloomberg, which specifies that although they do represent a decrease compared to 2019 when this same figure reached 300,000%, it is a very high figure and even more so when compared to previous months.

Repeating Mistakes

The reasons for all this are concentrated in one: a return to old government policies that have increased the money in circulation in a small economy.

Since 2018, Maduro had applied a series of measures to control devaluation and inflation. Among them was the reduction of government spending and bank loans.

This led to both inflation and devaluation being controlled, and a certain period of stability being experienced. But this was not sustainable over time, and even less so if Maduro returned to his policy of increasing the money supply.

Within weeks, the government began artificially pumping money into the economy through social bonds and unsupported raises. With this, inflation skyrocketed and the bolivar, which had remained stable against the dollar, fell precipitously in a matter of days, giving a flashback to times when volatility was enormous.

This led to a situation where inflation is once again a problem. And thus, as the economist and university professor Daniel Cadenas explained to Bloomberg, Venezuela will not come out of an annualized inflation of less than 100%, without a real change in economic policies.

The reality is that Venezuela is still in crisis, even though there are certain improvements. The economy is still not even close to what it was in 2012, and there is a long way to go for this to happen.

By Audy Castaneda

An Analyst Explains Why the Crypto Market Might Suffer a Reversal Soon

Alexander Salazar
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<strong>An Analyst Explains Why the Crypto Market Might Suffer a Reversal Soon</strong>

Some experts believe cryptocurrencies might decouple from US stocks, like in mid-2020 when the price of Bitcoin exceeded USD 20,000. Lunde thinks adopting BTC and other crypto assets will remain an emerging trend in the long term.

Analysts are examining the most prominent movements of the market in October when Bitcoin (BTC) grew by just 5.89%. Vetle Lunde, a senior analyst at Arcane Research, mapped out the likely direction of cryptocurrencies in the short term.

A common topic on Twitter was Uptober, a reference to the historic bullish performance of Bitcoin in October. Lunde considers that may have occurred again as data shows that BTC and exchange tokens exceeded the large-cap index.

The acquisition of Twitter by Elon Musk drove the large-cap index above Bitcoin, which achieved a 20% monthly gain. Over the last week, Dogecoin (DOGE) grew by 114%, which helped consolidate large capitalization companies.

In October, higher trading volume and lower volatility boosted the Bitcoin spot market, which benefited from a brief contraction. During the last week of October, Lunde observed the highest cryptocurrency short settlement volume occurring since July 2021.

That activity allowed Bitcoin to rise by only 6%, but Ether (ETH) and BNB (BNB) increased by 18% and 19%, respectively.

Although the short contraction provided an overall boost, Lunde concluded it did not change the price of Bitcoin significantly. The spot volume of BTC has risen by 46% over the last week, while the 30-day volatility index reached a two-year low. Besides, the 7-day volatility index and the annual average are 2.2% and 3%, respectively.

According to Lunde, investors should approach the Bitcoin market using short-term dollar cost averaging rather than leverage. Since the volatility of BTC dropped considerably, closely following the US stock market, investors should keep an eye on previous earnings reports.

The Bitcoin Price Still Depends on the Policies of the Fed

After the Federal Open Market Committee meeting, Jerome Powell will speak on US monetary policy, inflation, and the next rate hike.

According to Lunde, the chairman of the Federal Reserve (Fed) may prepare the market for further hikes to fight inflation. He thinks correlations between BTC and other asset classes may remain high while the 4.5-month trading range holds firm.

The analyst also believes Powell may provide subtle pivotal clues, which might cause related market environment weakening. He said a reduction in the crypto-related structural market activity led correlations to decline substantially.

Some other experts consider cryptocurrencies might decouple from US stocks, mirroring the crypto market in mid-2020. At that time, the price of Bitcoin rose far above USD 20,000.

The Outlook of the Price of Bitcoin in the Long Term

Lunde thinks adopting Bitcoin and other crypto assets will remain an emerging trend in the long term. Since a survey conducted by Fidelity indicated an interest in institutional markets increased in 2022, he is still bullish about BTC.

Although Bitcoin has fewer on-chain transactions, there might be more long-term participation with clearly-stated regulations. If US voters consider policies on cryptocurrencies during the elections, a clearer picture might emerge.

The weak growth of Bitcoin, its correlation with stocks, and a bearish trend for almost a year remain threatening. However, many analysts consider the current price of the pioneering cryptocurrency undervalued.

By Alexander Salazar

UN: Crypto Financing of Terrorism Quadrupled in Recent Years

Audy Castañeda
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<strong>UN: Crypto Financing of Terrorism Quadrupled in Recent Years</strong>

While cash remains the primary enabler of these activities, terrorists are found to be using crypto when there are no other means.

Mounting evidence suggests that terrorism is increasingly financed with crypto, according to a United Nations official.

The prevalence of crypto financing of terrorist activities may have quadrupled in recent years, Svetlana Martynova told a recent conference.

The senior legal officer of the UN Counter-Terrorism Committee Executive Directorate estimates that 20% of terrorist attacks have been crypto-financed. He reported that these numbers seemed to have increased as scrutiny of the illicit use of cryptocurrencies intensified.

Criminal activities associated with cryptocurrencies hit a record high last year, according to the most recent Chainalysis report. The figure has nearly doubled, from $7.8 billion in 2021, with illicitly associated addresses receiving $14 billion in 2021.

Chainalysis highlighted a number of militant organizations that had made efforts to fund their operations with cryptocurrencies.

Terrorists Abuse Cryptocurrencies

Martynova pointed out that cash payments continue to facilitate the vast majority of terrorism around the world. She also highlighted the use of an informal value transfer system known as “hawala”. The practice, which involves the use of middlemen, adheres to Islamic principles and is commonly used in the Middle East.

The United Nations official explained that terrorists often adapt their fundraising methods to suit the restrictions imposed by their environment. For example, “if they want to collect money from a territory that uses mobile payments as a common way to pay, they will abuse that mechanism,” she said.

However, if terrorists are effectively shut out of the formal financial system, they are more likely to abuse cryptocurrencies.

Member States to Step Up the Game

Increased scrutiny of crypto transactions has followed in the wake of international efforts to combat its use for illicit purposes. Martynova referred to a UN Security Council resolution, which calls on member states to step up their regulation of cryptocurrencies.

Martinova also touched on the global standards recommended by the Financial Action Task Force, which focus on tracking Blockchain transactions across jurisdictions.

Martynova regretted that the implementation of these regulations remains woefully disappointing. Only 27 of 98 jurisdictions in a recent survey reported that they had started to create a regulatory framework for cryptocurrencies. Consequently, even fewer have been in a position to enforce them.

One criminal activity associated with cryptocurrencies that has been gaining prominence is ransomware attacks. This week, the Biden administration is hosting a global summit, with officials from around the world participating, to address this problem.

A White House official said the goal of the meeting would be to establish a globally coordinated approach to the issue.

By Audy Castaneda

The Takeover of Twitter by Elon Musk Might Drive the Price of DOGE Higher

Alexander Salazar
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<strong>The Takeover of Twitter by Elon Musk Might Drive the Price of DOGE Higher</strong>

After the RSI exceeded the neutral 50 mark last week, the OBV indicator has also signaled an optimistic outlook for DOGE. According to analysts, investors should consider the liquidity zone is between USD 0.134 and USD 0.142 before buying.

Investors always face great disappointment shortly after the crypto market improves. Most leading crypto assets recently showed a bullish signal, trading in the green.

However, the crypto market turned as Bitcoin dropped by 0.70% while Ethereum lost 1.52% over the last 24 hours. That situation also caused the price of leading altcoins to fall.

Amid that volatility, the meme coin Dogecoin (DOGE) has maintained price stability, rising by over 140% over the last week.

Indicators Indicate the Price of DOGE May Rise Further

Over the last five months, Dogecoin has encountered considerable resistance around USD 0.079 and USD 0.069, hovering near those levels.

However, the recent takeover of Twitter by Elon Musk helped DOGE rise over USD 0.065, boosting demand in the market.

Last week, the Relative Strength Index (RSI) exceeded the neutral 50 mark. Since then, the RSI and OBV indicators have been bullish, signaling an optimistic outlook for DOGE.

Experts Recommend Not Investing in DOGE at the Current Price

Analysts consider investors should consider that the liquidity zone is between USD 0.134 and USD 0.142 before buying.

Besides, the Dogecoin funding rate is positive, while the Long/Short ratio has pointed toward a bullish moment over the last 24 hours.

Investors might have an excellent risk-reward buying opportunity if the price of DOGE retests between USD 0.134 and USD 0.14.

Meanwhile, the Price of SHIB Rises by 22%

Meanwhile, the price of Shiba Inu (SHIB) has experienced a significant spike amid the hype of meme coins. It rose by around 5.74% over the last 24 hours and more than 30% over the past week.

That increase may be due to the recent acquisition of Twitter by Elon Musk and its possible integration with Dogecoin. The community that supports SHIB on social media has allowed the popularity of the meme coin to skyrocket.

Since the price of SHIB has accumulated a 30% gain, many investors wonder where the bullish trend may head next. Although predicting the future is hard, investors should research the market to make better trading decisions.

SHIB started moving above the USD 0.00000946 threshold, now trading at USD 0.0001287. A daily trading volume of over USD 1 billion has held its increase over the last few days.

The price of SHIB meets with resistance at the USD 0.00001500 level, which previously served as strong resistance several times.

According to the price charts, the RSI indicator is 66.48, close to overbought territory. Therefore, investors should be careful with a bearish pullback to support SHIB at USD 0.0000100. In that regard, the bulls may consider buying back before the next upward trend.

The MACD indicator shows a significant upward trend that may continue over the coming weeks and months. However, there might be some profit-taking in the short term.

Due to the considerable supply and high market capitalization of SHIB, it will take its price a long time to increase tenfold. That situation has led many investors to look for alternatives.

By Alexander Salazar

US Employment Levels Continue to Grow despite Fed Hikes

Audy Castañeda
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<strong>US Employment Levels Continue to Grow despite Fed Hikes</strong>

Both employers and workers already know in advance what the Fed will do, so they have assimilated it into their expectations.

The United States Department of Labor reported that the volume of employment in the country seems to have a good trend, despite the international crisis and the repeated contractionary monetary policy of the Fed.

Although the labor market is not going through its best days, the truth is that it has been quite resilient in the last quarter. As reported by the New York Times; the data indicate that employers had 10.7 million open positions at the end of the summer, up from 10.3 million in August.

This figure leaves roughly 1.9 jobs posted for every unemployed worker, a persistently high ratio, even as the economy appears to be slowing because of the Federal Reserve’s “battle” against inflation.

Most analysts expect the Fed’s script to repeat itself, with the Fed raising its benchmark interest rate by 0.75 percent. The high probability that this event will be repeated seems to be the reason for the resilience of the US labor market. In other words; both employers and workers already know in advance what the Fed will do, so they have assimilated it into their expectations.

The Difficulty Is in the Hiring

The number of vacant positions is consistent with company surveys. Paradoxically, there are more difficulties in hiring than in obtaining a job. The National Federation of Independent Businesses found, in its September survey, that 23 percent of its members planned to create new jobs in the next three months. Of those, 89 percent said they had few qualified applicants.

The jump in job postings would have been due in large part to big increases in hotels and restaurants, which added 215,000 postings. The health and social care sector was looking for 115,000 more workers than the previous month, thus reaching a total of 2.1 million vacancies, the highest level recorded.

At the same time, the number of people hired fell to about 6.1 million, continuing the downward trend that began this spring. That could be a consequence of employers having a harder time finding qualified candidates or deciding to keep jobs open longer while they wait for the economic dust to settle.

Inflation Lock Still Exists

Inflation has forced some workers to look for ways to increase their income, either by asking for raises or looking for other jobs. At the same time, fears of an impending recession have led some workers to stay put unless another offer is in hand.

The number of layoffs decreased compared to recent months. That’s in line with weekly reports of initial jobless claims, which have hovered near record lows. After hiring aggressively over the past year, and often at higher wages, employers may be less willing to let people go, even when business falters.

By Audy Castaneda

While India Starts Piloting Its Digital Rupee, Thailand Does Not Rush to Launch Its CBDC

Alexander Salazar
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While India Starts Piloting Its Digital Rupee, Thailand Does Not Rush to Launch Its CBDC

The RBI announced the first pilot in the wholesale segment of the Digital Rupee, in which nine banks will participate. Meanwhile, the BoT has delayed the implementation of its CBDC to work on its various stages and prevent technical problems.

The Reserve Bank of India (RBI) launches its first Digital Rupee pilot program, in which nine banks participate. The central bank said that might reduce transaction costs by avoiding a settlement guarantee infrastructure or collateral to mitigate risks.

The RBI recently announced the start of the first pilot in the wholesale segment of the Digital Rupee. State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank, and HSBC will participate.

The central bank explained that the use case for this pilot is the settlement of secondary market transactions in government securities. They said they expected the Digital Rupee to make the interbank market more efficient.

The regulatory institution pointed out it would focus on other wholesale transactions and cross-border payments, considering the results of the first pilot. They said they would implement the first Digital Rupee pilot program in retail segment locations close to user groups.

In October, the Reserve Bank of India explained various aspects and risks of its central bank digital currency (CBDC).

Other Countries Work on Their National CBDCs

The Geoeconomic Center of the Atlantic Council indicates that 105 countries, representing over 95% of global GDP, explore CBDCs. According to the Bank for International Settlements (BIS), the emergence of stablecoins and other cryptocurrencies has led 90% of central banks to do it.

Meanwhile, Jerome Powell, the chairman of the Fed, said the US might issue a CBDC in at least two years. Some legislators, including Christopher Waller, the governor of the Fed, do not consider a digital dollar necessary. The latter recently said he disagreed with the idea of the Fed creating a central bank digital currency.

Thailand Does Not Plan to Launch a CBDC Soon

The Bank of Thailand (BoT) has not rushed into creating and implementing a national CBDC. In August, the central bank announced that it planned to test the token over the next year.

However, the BoT decided to delay the implementation of the project to work on its various stages. They think this will reduce technical problem risks while creating and testing the central bank’s digital currency.

Sethaput Sutivarnaruput, the governor of the Central Bank of Thailand, said they need research work to continue. In other words, they must wait until the regulator enters the previously announced testing phase.

The regulatory institution seeks to allow the integration of digital baht into the local payment system. Sutivarnaruput said they expect to test the CBDC to pay for goods and services among 10,000 retail users.

Many cryptocurrency projects have emerged over the last few years, leading central banks worldwide to consider issuing their CBDCs. India and Thailand are only two examples of countries working on the digital version of their national fiat currencies.

By Alexander Salazar

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