The volatility of the Turkish lira is pushing Turks to embrace cryptocurrencies as a means of payment and store of value.
The country’s national currency has lost 40% of its value against the dollar since September 2021, prompting many to turn to Bitcoin and Tether as alternatives.
Turks ditch the lira and exchange gold and dollars for stable coins
After nearly two decades of unbridled growth, Turkey is now suffering from devastating inflation that has brought its national currency to its knees. Once an expanding economy, Turkey now hangs by a thread trying to infuse some kind of value into the lira.
However, its citizens are becoming increasingly skeptical about the government’s ability to avoid a total devaluation of the currency and have turned to an even more volatile asset to protect against potential crises: cryptocurrencies.
Recent data from blockchain analytics company Chainalysis showed that cryptocurrency trading volumes using the lira peaked at five-quarters in the fourth quarter of 2021, averaging $ 1.8 billion a day traded on Binance, BtcTurk and LocalBitcoins.
More than half of the transactions against the lira in December involved Tether (USDT). The lira became the most traded fiat currency against USDT, outperforming both the US dollar and the euro.
Turkey’s growing appetite for stablecoins stems from the country’s old way of weathering economic turmoil: keeping your money in dollars. According to the Wall street journalTwo-thirds of Turkey’s bank deposits are foreign currencies, the majority being dollars and euros.
The huge currency deposits do not go unnoticed by the Turkish central bank, which lends dollars from private banks to intervene in the currency markets in order to give rise to the lira. However, as most of the central bank’s efforts to shore up its currency were unsuccessful, many Turks have lost what little faith they had in both their government and the country’s banks.
Many of them believe that a financial crisis is inevitable. If that happened, there would be a rush to withdraw dollars, which would have to be withdrawn from the central bank.
“There are some doubts about whether the government could get the dollars. At worst, some fear that the government may force banks to convert dollar deposits into lira, ”reported the Wall Street Journal.
To avoid this, tens of thousands of Turks have been exchanging their bank dollars for USDT and then using the stablecoin as a gateway to Bitcoin.
“The volatility of the Turkish lira and rising inflation seen in recent months have led our investors to view cryptocurrencies as a profitable investment in the long term and as a hedge against inflation in the short term,” said Esra Alpay, Turkish Cryptocurrency Marketing Director. Bitlo exchange.
Featuring a roundup of the biggest daily stories in the world of cryptocurrencies, DeFi, NFT, and more.
Obtain a edge in the crypto asset market
Access more information and cryptographic context in each article as a paid member of CryptoSlate edge.
Join now for $ 19 / month Explore all the benefits