Turkish exchanges OKEx and BtcTurk are onboarding thousands of crypto traders as the Lira falters.
Bitcoin (BTC) jumped to seven-month highs against Turkey’s national currency, the lira (TRY), on Monday.
The price spike comes after the U.S. imposed sanctions against Turkey on Friday for continuing to hold an American pastor in custody.
The resultant economic shock-wave has seen the lira drop to a new lifetime low of 7.20 TRY against the U.S. dollar today, after already having dropped 27 percent last week. On a year-to-date basis, the lira is down more than 80 percent against the greenback.
The crash in the lira looks very likely to be increasing bitcoin’s proposition as a safe-haven asset in Turkey, and the price of the cryptocurrency shot up to 47,192 TRY earlier today – the highest level since January 21, according to Bitfinex data. At press time, the figure had dropped slightly to around 44,000 TRY.
Since August 8, BTC has appreciated against the lira by 31 percent and is also up by 67 percent from the June 24 low of 26,337 TRY. By comparison, the cryptocurrency’s U.S. dollar-denominated exchange rate is up just 12 percent from its low of $5,755 seen on June 24.
So what’s behind the sudden appeal of bitcoin for Turkish investors?
The sharp slide in the lira has already pushed up inflation, which, along with a slump in spending power for TRY holders, has certainly boosted bitcoin’s appeal as a store of value.
The increased interest is evident from the fact that Turkish cryptocurrency exchanges Paribu, Btcturk, and Koinim have witnessed a spike in trading volumes since Friday. As of writing, Paribu is reporting a 100 percent rise in trading volumes for the BTC/TRY trading pair.
Looking forward, BTC could well rise further against the lira, as Turkey’s President Erdogan continues to oppose interest rate hikes to stabilize the currency and, rather than backing down, has referred to the President Trump’s decision to impose sanctions on Turkish steel and aluminum as an “attack“ on its economy.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
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This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.
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As Turkey’s economic woes deepen its currency, the Lira, has plunged to new depths. This has caused volumes on local exchanges to surge as crypto traders take advantage of the currency crisis.
According to a Forbes report Turkey’s largest exchange, Koinim, has reported a 63% increase in volume while smaller exchanges are finding their volumes are up also. Turkey is still open to crypto trading unlike Iran and India which are making things difficult for the industry. Exchanges can still work with local banks and traders can buy and sell crypto using fiat, and not relying solely on peer-to-peer exchanges such as Localbitcoins.
Over the past week the Turkish Lira has lost 25% against the US dollar. President Trump’s doubling of import tariffs for steel and aluminum on the country has caused the slide and added to economic despair in Turkey.
Some investors have been moving from local currency into US dollars or Euros for fear of further declines. While other traders have seen cryptocurrency and Bitcoin as a safe haven. One crypto trader told Coindesk;
“I started personally trading crypto 1.5 years ago because of the weakness of the Turkish lira, and fear of the political, and financial, status of the Turkish government, cryptocurrency makes me feel much safer.”
Others have taken to Reddit claiming “Holding Bitcoin is less risky than holding Lira.” This maybe questionable since Bitcoin has lost around 70% this year whereas the Lira has declined 45% in the same period.
The real story is a failing faith in fiat when governments and politicians can have such a major influence on its value. Internet entrepreneur Kim Dotcom has echoed this sentiment on his Twitter feed;
Trust me. Buy crypto and gold. Your USD will become worthless. With US economic collapse all old money currencies will crash.
Times will get tough. But you’ll be fine if you hedge some of your assets in preparation for the crash.
The big crash is coming 100%.
— Kim Dotcom (@KimDotcom) August 12, 2018
While Turkey’s President, Recep Tayyip Erdogan, has described the plunge in the country’s currency as a foreign “operation”.
A similar situation has been seen in Venezuela where unchecked levels of inflation have cause the local currency, the Bolivar, to become next to worthless. As a result people have flocked towards cryptocurrencies as a safer place to store wealth.
Turkish policymakers are currently scrambling to enact capital controls and Erdogan has called upon Turkish citizens to exchange any dollars, euros or gold they own for the Lira to keep it propped up. The future of cryptocurrency trading in Turkey could be in the balance if the financial misery deepens.