In recent times, there has been a remarkable surge in bitcoin and cryptocurrency trading in Turkey’s exchanges. President Donald Trump announced in August 2018 with respect to doubling metals tariffs to Turkey is one of the reasons attributed to this surge. Turkish Lira has lost its value around 45 percent against the US dollar this year till now. Turkey’s economic crisis continues.
The Impact of Trump’s Decision
Donald Trump tweeted “I have just authorized a doubling of Tariffs on steel and Aluminum to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong dollar. Aluminum will now be 20 percent and steel 50 percent. Our relations with Turkey are not good at this time.”
However, bitcoin and cryptocurrencies have performed well despite the poor performance of Turkey’s currency. According to the reports of Koinim, Turkey’s largest exchange, there was 63 percent increase in bitcoin trading volume, whereas BTCTurk and Paribu exchanges reported a 35 percent and 100 percent hike in their trading volumes.
Turkish President’s Appeal to the People
During a speech, Erdogan, the Turkish Public President had appealed to the Turkish people to exchange their assets and foreign currencies for Lira. He said that “this will be my people’s response to those who have waged an economic war against us”. In response to this, the crypto commentator WhalePanda tweeted “Better buy Bitcoin instead.”
The outside analysts were urging Erdogan to hike the rates for attracting the foreign currencies. In a statement to Zero Hedge, Copenhagen-based Nordea Bank Strategist Morten Lund said- “Seems like a complete crash, so they need to act now, the Lira will keep falling if they don’t hike rates today.”
Turkish Lira Worst Performance This Year
As an emerging market currency, the Turkish Lira is showing abysmal performance in 2018. Right from the beginning of 2018, its value reports a downfall of 35.85 percent, were as the Argentina Peso has dropped only to 33.72 percent in the same year.
The Lira was under constant pressure in Foreign exchange trade. Over the past 12 months, the Turkish Lira has dropped almost 50 percent against the Dollar. During July, the inflation shows an annual rate of 15.9 percent, which is five times more than the average rate shown by wealthy nations. Even though the Turkish government was borrowing foreign currencies at a more accelerated rate.
Bitcoin – More Stable than Lira?
Turkey’s economic crisis continues to get worse throughout this year. The crisis got accelerated during the last week as the Financial Times reports that the supervisor at the European Central Bank was concerned about exposure of some of Europe’s most significant lenders to Turkey. The BBVA, UniCredit and BNP Paribas, are all said to have considerable liabilities in Turkey.
It has been strongly believed that Bitcoin will never be widely accepted as a real currency due to its unstable nature. However, because the Turkish Lira dropped 20 percent in one day, CEO of ShapeShift – Erik Voorhees tweeted “we have entered a time now where some fiats are far less stable than Bitcoin. Turkish Lira is plummeting ~20 percent in one day”.