In the face of an economic downturn and escalating inflation, Turkish citizens have reignited their interest in cryptocurrency. Their focus, particularly on the prominent stablecoin Tether (USDT), has surged amidst the continuous decline of the Turkish lira and widespread fear of rampant inflation returning to the country.
Political Influence on Cryptocurrency Sentiment
This economic uncertainty came to the fore after Recep Erdogan secured another term as President, marking an intensified downtrend in the Turkish lira that has been palpable over recent years. Erdogan, a well-known detractor of digital currencies, emerged victorious in the presidential race, while his adversary, Kemal Kilicdaroglu, who garnered two million fewer votes, openly supported cryptocurrencies.
According to recent reports from Bloomberg, the focus of the Turkish populace shifted towards USDT, the most considerable stablecoin by market capitalization, at the start of May, in the lead-up to the presidential election. This keen interest remained high post-election, even though Erdogan acquired 52% of the votes, assuming leadership.
A Depreciating Currency Drives USDT Adoption
A likely catalyst propelling the Turkish populace towards cryptocurrency is the depreciating national currency, which recently plummeted to a record low against the US dollar. Presently, 1 Turkish lira equals a mere $0.042, a stark contrast from its approximate value of $0.15 at the onset of the global COVID-19 pandemic of 2020.
For some Turkish citizens, USDT has become a refuge in an increasingly volatile inflationary landscape. This asset, which maintains a stable peg with the US dollar, offers a relatively secure and straightforward entry point for Turks into the crypto arena.
Regulations Amplify Crypto’s Attractiveness
Simultaneously, domestic regulators have limited the purchase of dollars and even gold using the lira, further enhancing the appeal of cryptocurrencies. Ebru Güven, a university lecturer and former banker, expounded on the situation:
“PEOPLE INVESTING IN STABLECOINS CAN PRESERVE THEIR WEALTH; IT’S ONE OF THE STRATEGIES TO RETAIN SOME VALUE AMIDST SUCH HIGH INFLATION. THAT IS THE ONLY IMPETUS FOR PEOPLE TO BUY STABLECOINS CURRENTLY.”
Worried about the lira’s unstable condition, some Turkish residents have spread their savings into the cryptocurrency market. For instance, 28-year-old graphic designer, Batuhan Basoglu, disclosed his motivations:
“WITH THE IMPENDING ELECTION, I FELT COMPELLED TO CONVERT MY TURKISH LIRA TO US DOLLARS DUE TO THE UNCERTAINTY SURROUNDING THE CURRENCY’S FUTURE. TO SHIELD MYSELF FROM THIS RISK, I TURNED TO TETHER (USDT).”
As per data from cryptocurrency analytics provider Kaiko, USDT trading volume on BtcTurk surged towards the end of May, coinciding with Erdogan’s presidential victory.
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