Turkey Embraces Bitcoin & Tether As Lira’s Value Sinks

Turkey’s economy has gone through immense turmoil this year, as the  country’s native fiat currency, Lira, suffered from high levels of  inflation: losing 44% of its value by 3 January due to a 36% rise in inflation.

By 7 January 2021, we observed that the currency’s 90-day historical  volatility had risen to an annualized 65% (as per TradingView  data),increasing fivefold in just two months time. This meant that Lira  was now more volatile than bitcoin, who’s historical volatility has  dropped to 61%.

Amidst such levels of volatility in their currency, many have ditched Lira for assets with an even riskier reputation: cryptocurrencies. Such a shift to crypto is becoming increasingly likely in parts of the developing world where  government policies spark discontent among the population.

The widely spread distrust in the government originates from Turkish  President Recep Tayyip Erdogan’s strategy of reducing interest rates  even in times of rising inflation, hence contradicting basic economic  orthodoxy.

Several central banks of the country have been replaced for opposing these cuts, Coindesk notes.

With the rise in crypto investments, cryptocurrency trading volumes using the lira leapt to an average $1.8 billion a day across three exchanges,  Chainalysis reports. And the people of Turkey are particularly  optimistic about stablecoin tether, whose value is pegged to the dollar.

This fall, trades that utilised lira against tether outpaced even the  dollar and euro, turning into the most traded government backed currency  against tether.

The turkish population have long weathered such times of economic instability through storing their  money and assets in the form of gold, dollar or euros. However, this  time around, the emerging market for digital currencies brought with  them a more volatile yet novel instrument for storing their finances.

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Turkey Embraces Bitcoin & Tether As Lira’s Value Sinks