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- While the Turkish lira's recent volatility against the U.S. dollar is almost unbearable, it appears that Turks have abandoned the fiat currency for digital assets, the Wall Street Journal reports.
- Note that the lira has shed 40% of its value against the U.S. dollar since September due to the ongoing implementation of unorthodox monetary policy in the backdrop of surging inflation. But bitcoin (BTC-USD) currently drifts lower by more than 10% against the USD.
- Still, "the Turkish lira’s volatility and rising inflation seen in recent months has led our investors to see cryptocurrency as a profitable investment in the long term and as a hedge against inflation in the short term,” Turkish crypto exchange Bitlo Chief Marketing Officer Esra Alpay told the WSJ.
- In fact, cryptocurrency trading volumes using the lira have climbed to an average of $1.8B a day across three exchanges during Q4 2021, the WSJ reports, citing blockchain analytics firm Chainalysis.
- Turks also seem interested in tether (USDT-USD), a stablecoin that is pegged to the U.S. dollar, as the lira recently became the most traded government-issued currency against tether, outpacing the USD and the euro, the WSJ cites data provider CryptoCompare.
- Keep in mind that the iShares MSCI Turkey exchange-traded fund (NASDAQ:TUR) is off nearly 30% on a Y/Y basis, though elevated by 1% M/M.
- Speaking of digital tokens, bitcoin (BTC-USD +2.2%) and ethereum (ETH-USD +4.3%), the two largest cryptos by market cap, catch a bid after consumer prices in the U.S. surge 7% in the last month of 2021.
- The rotation into risky digital assets comes even after Turkey banned crypto payments in mid-April of last year.