Petro, a digital currency recently issued by the Venezuelan government, which is a cryptocurrency based on the value of a barrel of oil.

It is assumed that the descent of the oil price to minimum levels will affect the decline of the “Petro” currency as well.

But on the ground, it is completely different between traders.

Venezuela is one of the countries whose economy is completely dependent on oil, and uses it almost exclusively to support more than 30 million people.

The government of President Nicolas Maduro has been increasingly pushing its official cryptocurrency as a way to support its economy.

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Given the drop in the price of oil, how does this affect the petro currency?

Yesterday, all financial markets woke up to huge losses, as the price of a barrel of oil fell from $46 to $27.5.

The world’s leading commodities – other than gold – and stock markets also fell in the midst of the panic caused by the spread of the Corona virus and the trade war between Russia and OPEC led by Saudi Arabia.

The downturn affected the crypto markets as well.

Bitcoin is down about 10%, losing gains in the past few weeks.

But in Venezuela, the controversial petro, which the Maduro government says is linked to the price of oil and other commodities, appears to have been unaffected and its price continues to move independently of the markets that support the currency.

why?

The “Petro” currency is not a stable currency, and its price is directly derived from the price of a barrel of oil, which was estimated at 60 dollars, but despite the halving of the price, the “Petro” currency has maintained its price at 60 dollars.

This value is equally questionable even if we take into account the performance of the rest of the goods that are supposed to be part of the basket of goods that sets the price of one “petro”.
In fact, the number derived from this calculation is the least important of all when determining the true price of the Petro, as no one outside the government uses it anymore.

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The price of the petro on the secondary market has always been more volatile, despite claims by the Venezuelan government that the petro is a stable currency.

On the Amberes trading platform, the petro/euro pair shows a drop of only 2 euros during yesterday’s bloody dips.

On the other hand, Petro/Bitcoin (the most liquid pair on Amberes) is showing a drop from 0.025 BTC per token to 0.024 yesterday.

However, the price of the token against the bolivar has fallen by just over 10%, which while closer to reality is still very far from the real performance of the oil market.

On Criptolago, a currency exchange approved by the Venezuelan government, its figures show that the value of the petro is estimated at 0.007 Bitcoin, or about $54.

But on peer-to-peer trading platforms, the price of the petro is estimated at 0.0025 Bitcoin, or $19.

All of this means that in reality traders do not treat the petro as a stable currency, and no one is bound by the official government rate.

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In fact, every trading pair seems to behave completely differently and apart from any real market value.

For the time being, yesterday’s market crash has not affected trading in Venezuela.

data from Queen DanceIndeed, it is showing a recovery and an exit from the downtrend in trading volume, but if oil prices continue to fall, the Venezuelan economy will undoubtedly suffer.

As for what will happen with the state-backed “Petro” currency, this cannot be predicted.

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