As Turkey’s economic situation worsens and the lira continues to spiral downwards, investors are increasingly turning to cryptocurrencies as a safe haven. A recent Bloomberg report highlighted that the local demand for Tether, the largest dollar-backed stablecoin, surged in early May and has remained consistently high. Notably, Tether’s trading volume share on BTCTurk, one of Turkey’s largest cryptocurrency exchanges, is at 20%, a stark contrast to the mere 1% on Binance. This demonstrates the strong demand for stablecoins in Turkish markets, and reveals their popularity as a means of protecting capital.
Turkey’s President Erdogan has been known for his unconventional economic policies since the 2018 election. Some of these measures include cutting interest rates to control inflation, which has reached a staggering 80%, and disregarding standard monetary practices. Consequently, this has resulted in the lira’s value dropping by 80% and causing concern among Turkish citizens as their buying power steadily declines.
While regulations make it difficult to buy dollars or gold with the lira, investors are taking advantage of the opportunities provided by cryptocurrencies like Tether. Ebru Güven, an Istanbul-based university lecturer and former banker, explained that investing in stablecoins allows people to protect the value of their wealth in the face of such high inflation. As a result, many investors have found stablecoins like Tether increasingly appealing amidst Turkey’s ongoing financial crisis.
One such investor is Batuhan Basoglu, a 28-year-old graphic designer who decided to convert his savings to Tether and other cryptocurrencies after the election. Expressing uncertainty about the lira’s future, he chose not to convert his Tether tokens back, indicating a potential lack of faith in Turkey’s current financial infrastructure.
Interestingly, research from GWI reveals that Turkey has the highest ownership rate of digital currencies worldwide, standing at 27.1%. The shift towards digital tokens comes as access to physical dollars and other currencies becomes increasingly difficult due to tight capital controls. Stablecoins like USD Coin (USDC) and Tether (USDT) have emerged as attractive alternatives for Turkish residents seeking to protect their wealth from the effects of currency fluctuations.
Ehab Zaghloul, a research scientist at Tribal Credit, a digital payments platform for startups in emerging markets, shared that people on both the retail and institutional levels are increasingly concerned about currency devaluation. As such, they are looking to hold additional assets that are pegged to a stronger currency, like USDC or USDT, which are both pegged to the U.S. dollar.
Overall, the soaring popularity of stablecoins in Turkey demonstrates their potential as a safe haven in times of economic uncertainty. With the country’s current financial situation prompting investors to seek alternative asset classes, cryptocurrencies like Tether appear to be an increasingly attractive option.
Source: Cryptonews
