On August 13, 2018, cryptocurrency trading surged in Turkey due to the recent plummet in the price of the Lira.
As the Turkish government looks to restore investor confidence in the Lira, Koinum, the country’s largest crypto-exchange, announced a 63 percent increase in the trading volume of Bitcoin. At the same time, Paribu, and BTC Turk reported that their exchanges were up 100 percent and 35 percent.
While Turkey is home to the largest community of crypto adopters in Europe, this is the first time that they have weathered economic turbulence like this. This is an indicator that the crypto-community of Turkey sees digital currencies like Bitcoin as a safe bet while their national currency flounders.
National Environment for Adoption
Turkey is particularly friendly to the cryptocurrency ecosystem given that Turkish banks work with local exchanges. This means that new adopters can begin exchanging fiat for crypto with a relatively little hassle. Other countries have to rely on peer-to-peer exchange, which makes adoption of crypto much harder.
While Turkey descends into a currency crisis, the Turkish Lira has fallen to a record low of TL 7.23 to the Dollar. The Turkish stock exchange was also hit, with the BIST 100 dropping to its lowest level since 2009. Given that Turkey is a primary exporter to both the Middle East and Europe, a hit to the price of their currency is particularly devastating to their economy as a whole.
Turkish adopters see the move towards cryptocurrencies as a hedge against the political and financial instability in the country. Since the 2016 coup attempt, Turkish President Recep Tayyip Erdogan has taken on greater executive powers, cracked down intellectuals, and projected power throughout the Middle East and Europe.
A Political and Economic Skirmish
This has sent Turkey and the United States to loggerheads over several diplomatic rows. Most recently, President of the United States, Donald Trump demanded the release of imprisoned American Pastor Andrew Brunson. While both countries are NATO members, the United States recently imposed tariffs on Turkish steel and aluminum. This precipitated a 45 percent drop in the price of the Turkish Lira.
Though the finance minister has stated that Turkey would begin taking “market calming measures,” investors confidence has been shaken. Reminiscent of Venezuela’s move towards cryptocurrency, it appears that people are starting to see cryptocurrencies as the international haven asset when their governments are in financial turmoil.