Deteriorating economic conditions in Turkey could lead to an outright recession. Bitcoin exchanges in the Turkey saw 100% or more volume surges briefly as inflation of the domestic currency, the lira, climbed as high as 20%.
U.S. Trade Sanctions
President Donald Trump imposed economic sanctions on the country because President Recep Tayyip Erdogan has refused to hand over an American preacher that is jailed in the country. President Trump followed this by further authorizing steel and aluminum tariffs to be doubled. They are now 20% and 50% respectively. President of Turkey, Recep Tayyip Erdogan, has urged citizens to sell their foreign currencies to support the lira. The domestic currency is positioned as a way to “fight a war of independence and the future” for Turkey.
The situation in Turkey will have global impact because of the country’s physical location. It is essentially a buffer between European Union countries, and five countries which are in ongoing internal conflict. On the Western side, Turkey borders Greece and Bulgaria, and their other six bordering countries are Georgia, Iran, Iraq, Syria, Armenia, and Nakhchivan, a territory affiliated with Azerbaijan. Turkey has the largest standing army in Europe because of this.
Data from Turkey’s four largest cryptocurrency exchanges highlight the benefits of decentralized currency in these situations.Trading volumes soared on Friday last week in direct correlation to inflation of the lira. Across the four exchanges (BTCTurk, Paribu, Koinim, Koineks), average volume growth was 112%.
BTCTurk is the most active exchange in the country, and showed the largest volume rise of 166%. Bitcoin was by far the most traded for cryptocurrency, with Tether and XRP showing some increased activity. President Recep Tayyip Erdogan could make a move to ban cryptocurrency exchanges to reduce any further loss to Bitcoin from the lira. However, the market seems to have stablized. Coming into this week, volumes have stabilized to their previous values.
In comparison of Bitcoin and the lira as investments for 2018, BTC has lost 23% against the lira. however, a longer term look at Bitcoin held from one year ago would have brought a 223% return of the lira. As the most universal cryptocurrency, it’s likely that individuals in countries experiencing extreme inflation will always turn to Bitcoin because of its consistent resistance to hacks, market leading liquidity and overall versatility.
By: BGN Editorial Staff