Bitcoin Is A Haven For Hard-Pressed Turks

Turkeys woes continue without let-up. Inflation figures of over 16%, unemployment at 12%, and a national currency that has lost half its value since 2018 means that many Turks are ditching the lira in favour of the perceived much safer haven of Bitcoin.

The Turkish lira plummeted again last month as President Erdogan sacked the incumbent central bank governor Naci Agbal after he had the temerity to raise interest rates in order to boost the lira, a move welcomed by most economic observers.

The upshot of the sacking was that the Turkish lira fell yet again; this time by about 14%. The first meeting of the Turkish Monetary Policy meeting since Agbals dismissal is due this Thursday. According to a Morgan Stanley statement cited by Reuters, any surprise cuts in interest rates could lead to a decline of between 10 to 15% in the lira.

All this bleak economic news is having its effect, and Turks are looking for a way out of their fast-devaluing currency. Cryptocurrency trading, for many, has been that way to hedge against inflation.

According to Chainalysis, trading volumes in cryptocurrencies, from the beginning of February to late March, reached 218 billion lira. On the weekend that Agbal was sacked, a spike in volume of around 7 billion lira was recorded, as compared with the same time a year previously. Cryptocurrency searches on Google also reached a record high the week before Agbals dismissal.

In an article on the Guardian today, Ozgur Guneri, CEO of crypto exchange BTCTurk, said:

“Turkish people like stable assets due to our history of high inflation. That is why generation after generation of Turks invested in gold, real estate and dollars.”

According to the article, no moves have yet been made to regulate or even tax cryptocurrencies, a situation that will certainly add to their appeal, especially among the younger and more tech-savvy population.

With Erdogan calling recently “for Turks to invest gold and foreign currencies kept under the mattress in order to shore up domestic financial markets”, it might well be that these calls fall on deaf ears, as what is kept under the mattress might well be better spent on cryptocurrencies that might be perceived to have far more value.