I was under the impression that bitcoin trading volume has been increasing steadily in Venezuela.

https://coin.dance/volume/localbitcoins/VES

It is important to look at the axis and see there is no major growth right now it is floating around at 500 BTC per week which is about 4 million usd or approximately zero. This transaction volume is a rounding error for a country of that size

Yes, it is. My understanding is that some people use bitcoin as a bridge for remitting funds into Venezuela.

But this is a niche usage. What locals really want are dollars. Something like 50-60% of all Venezuelan transactions are now being conducted with U.S. paper money and Zelle.

It's true, most transactions that involve USD are done with paper money in Venezuela (which is why I mentioned I used BTC when it wasn't physically feasible to transact because coming by such paper money is not straightforward) but when it comes to electronic solutions it's a constant cat-and-mouse game. You mention Zelle which was up until very recently [0] the most used option, but people are now seeking alternatives- cryptocurrency just being one of them- and I ought to clarify that not everybody has a trusty acquaintance/family member with an US-based bank account (or a bank account themselves) to use these solutions.

[0] https://www.archyde.com/wells-fargo-eliminates-access-to-zel...