Turkish Lira Plunges as Crypto Trading Volume Peaks
Last updated on December 4th, 2022 at 10:04 pm
Crypto activity in Turkey is currently at a peak because of the events surrounding the value of the Turkish Lira.
Currently, crypto trading volumes in Turkey have surpassed one million daily. This comes as the Lira takes yet another plunge.
The slump in prices for the Turkish Lira comes amidst worries of the country’s economic policy.
Since September, the Lira’s value has declined by around 40%. This has pushed Turks towards looking for ways to protect their savings amidst the growing inflation.
Record High Crypto Transactions
According to Reuters, cryptocurrency trading volume in Turkey have reached the one million threshold.
Data from Chainalysis notes that the last time crypto transactions reached this level was earlier in the year. At the time, the chief of the Turkish central bank was replaced, which led to a notable slump in the fiat currency.
However, as the year progressed, the crypto transaction volumes in Turkey dropped to below half a million daily. However, the recovery did not last long and the fiat currency started suffering another bout of volatility.
The Turkish Lira has been depreciating since 2008; hence, Turks are versed in using the U.S. Dollar or gold to protect their savings from losing value.
Over the past decade, the Lira has lost around 90% of its value and the growing popularity of cryptocurrencies has made this asset class a preferred tool to mitigate inflation.
Data shows that the most traded digital assets in Turkey since 2019 are Bitcoin and the USDT stablecoin.
USDT protect traders from volatility because its value is pegged to the US Dollar. On the other hand, Bitcoin has been used as a store of value because of its capped supply at 21 Million coins, making it deflationary.
The rising popularity of crypto trading is attracting attention from regulators. In September, the Turkish Deputy Finance Minister stated that the country would unveil crypto regulations.
Earlier in the year, the Turkish Central Bank banned cryptocurrencies for making traditional purchases. However, these regulations are doing very little to curb the spiraling use of cryptocurrencies because of a depreciating Lira.
Cryptocurrency As a Store of Value
Currently, the global economy is changing and inflation levels are increasing.
Case and point, the U.S. is suffering from the highest level of inflation in 30 years. This has prompted an increase in crypto trading volumes in the U.S.
Other countries such as Argentina that have been grappling with hyper-inflation over the years have also been using cryptocurrencies as a store of value. Stablecoins and Bitcoin have gained the most adoption for this use.
In September, El Salvador, a Central American country, adopted Bitcoin as legal tender. The country has bought more than 1000 Bitcoins to make this possible.
Before adopting the primary cryptocurrency, the country received a warning from the World Bank and the International Monetary Fund because of the volatility of Bitcoin, which could harm the economy and the country’s financial system.
Despite facing high regulatory scrutiny, the use of Bitcoin as a store of value has earned it the name “digital gold.”
Bitcoin supporters believe that Bitcoin has the similar attributes as gold, in that it has a limited supply. Therefore, an increase in demand could boost its values significantly in the future.
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