Key Takeaways
- Bitcoin (BTC) has seen an increase in popularity in Turkey, owing to the falling Lira
- The Turkish Central bank cut down the interest rate in the country to 15%, causing the Lira reach all-time lows
- The Lira currently trades for over 11 against the USD, calling for wider Bitcoin adoption in the country
YEREVAN (CoinChapter.com) — Bitcoin (BTC) continues to experience a substantial increase in trading volumes in Turkey thanks to the sharp decline in the value of the Turkish Lira (TRY). Last week, the country’s currency slumped to a new all-time low, crossing 11 to the dollar. That is an over 6% decline. Since the beginning of the year, the Turkish Lira has lost over 30% against the US Dollar.
Thanks to the steady dump, the Lira is currently the worst-performing currency in the emerging markets. While the price of Bitcoin (BTC) in the global market declined, BTC almost reclaimed the $60,000 mark in Turkey. This rise had little to do with the performance of Bitcoin (BTC) and everything to do with the Lira falling.
However, it is not only the declining Lira that is Turkey’s problem. The long-time Turkish president, Recep Tayyip Erdoğan, has become the country’s main liability over the years. When he took over the country’s reins in 2003, the Lira traded at just 1.6 against the USD.
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Erdogan’s urge to become a global player has thrown Turkey into an economic abyss. His ambitions to lead the Islamic world have made him spend billions in proxy wars and conflicts with neighboring countries. While he has amassed a fan following both at home and abroad, his image upgrade over the years has cost the Turkish citizens greatly.
Now, the tides seem to have turned against him. Citizens are disgruntled at the state Erdogan’s misrule has rendered them and the Turkish economy. To many of them, the only hope out of their economic mess is Bitcoin (BTC) and other emerging cryptocurrencies.
Turkish Central Bank Lowers Interest Rate Again
Ask any mediocre economist, and they will attest that central banks should increase interest rates to fight inflation.
Not in Turkey, though. With the inflation rate touching 20%, the Turkish Central Bank decided to lower the interest rate further to 15%. This is the third consecutive month that the Central Bank is cutting down interest rates. In Sept, the interest rate stood at 19%. In addition, the country’s apex bank had moved to crack down on Bitcoin (BTC) earlier this year.
Of course, the announcement comes from the Central Bank, but Erdogan’s decision. While the country’s economists refer to every economics textbook to explain why this won’t work, Erdogan uses another book to justify his decision.
The controversial leader has resorted to quoting the Islamic scriptures. He uses the Quran to back his claims that high-interest rates are evil and un-Islamic.
“As long as I am in this position, I will continue to fight against [high] interest rates…I cannot stand by those who defend interest,”
the Turkish President told party workers.
Ergodan has purged all previous Central Bank Governors and board members that opposed his decision to cut down interest rates to encourage borrowing. In addition, he has sacked the three former Governors of the bank. Incumbent Sahap Kavcioglu has been the fourth Governor since 2019.
“Erdogan is running the show…If he wants to lower interest rates, he will get lower rates, regardless of how high inflation might be or how the economy is doing,”
Jordan Times quoted Fawad Razaqzada, market analyst with ThinkMarkets, saying.
It is no wonder, then, that nobody in Turkey takes the Central Bank seriously anymore.
Last month, the Financial Action Task Force (FATF) added Turkey to its grey list. As a result, Erdogan stands accused of money laundering and terror financing by the organization. The move has impacted the falling Lira further.
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Bitcoin (BTC) gives hope to Turkish citizens
The growing concerns over the falling Lira have resulted in a sharp increase in cryptocurrency trade in Turkey. More Turks are willing to wager their fates with Bitcoin than they are with their Central Bank.
According to Crypto payments platform Tripple A, there were over 2.4 million cryptocurrency users in Turkey. This number would have possibly increased in recent days.
However, this also raises concerns for Turkish crypto users. Earlier this year, Erdogan announced his plans to intensify his fight against cryptocurrencies. In April, Bitcoin investors lost a fortune when Turkey declared it would ban crypto in the country.
Even though Turkish citizens are still allowed to own crypto, Erdogan might decide to put an end to it soon. The last thing his Government needs is an exodus of more capital from the country.
For those Turkish citizens still not convinced, international experts are encouraging them to move Bitcoin (BTC). Even Microstrategy CEO Michael Saylor took to Twitter to argue for wider BTC adoption, claiming Turks are better off holding BTC than USD.
As the world watches the Turkish Lira (TRY) get battered, it remains to be seen what Erdogan’s economics (or Erdonomics, as people call it) will do to it. In the meantime, with inflation skyrocketing, Turkey has made the perfect case for global Bitcoin (BTC) adoption.
