Turkey’s Economic Crisis Drags Bitcoin into Frenzy | turkey


The neighborhood tea room is central to daily life across Turkey, an Ottoman tradition that has endured through the centuries. At Çorum’s Red Lightning tearoom, enterprising owners have one foot in the past and one in the future: it’s the first in the country where customers can pay in bitcoin.

“Everyone we know in Çorum is starting to invest in cryptocurrency. We believe that in about five years, regular currency will be in decline, it will be replaced by digital currencies. So we wanted to be in a good position now, ”said co-owners Hüseyin Nalcı, 38, and Kerem Kutay Yıldırım, 28.

“Older customers think it’s a bit absurd. They laughed at us. But now the dürüm [wrap] the store next door asks us to teach them.

The Turkish lira fell dramatically last month after President Recep Tayyip ErdoÄŸan’s shocking decision to fire central bank governor Naci AÄŸbal. The reserve is now in its fourth governor in less than two years and the lira has lost half of its value since the 2018 currency crisis.

Inflation hit a six-month high in March of 16.19%, well above a target of 5%, and unemployment remains high at 13.4%.

The latest economic crisis has led to a surge in cryptocurrency trading in the country, with investors hoping to take advantage of the recent bitcoin rally and hedge against inflation.

Data from American researcher Chainalysis analyzed by Reuters showed that trade volumes between early February and March 24 reached £ 218bn (£ 19bn) peaking on the weekend Ağbal was sacked, up from just over £ 7bn pounds at the same time a year earlier. A cryptocurrency worth £ 23 billion was traded in the early days after the shock was announced, data shows, up from £ 1 billion during the same period in 2020.

Hüseyin Nalcı, 38, co-owner of the Kırmızı Şimşekler (Red Lightning) tea room in Çorum
Hüseyin Nalcı, 38, co-owner of the Kırmızı Şimşekler (Red Lightning) tea room in Çorum. Photography: The Guardian

Google’s Turkish searches for cryptocurrency also hit an all-time high the week before Agbal’s removal. The governor, who took the post in November, is said to have disagreed with ErdoÄŸan over the interest rate hike: Contrary to mainstream economic thought, the president has repeatedly stated that he believes interest rates to rise. high interest caused inflation.

Bitcoin’s rise to a new high of just under $ 62,000 (or over £ 44,000) saw interest in digital currency soar around the world: investors and businesses embraced the asset are emerging despite warnings about its volatility.

“Turks like stable assets because of our history of high inflation,” Özgür Güneri, CEO of the BtcTurk cryptocurrency exchange, told Reuters. “This is why, generation after generation, the Turks have invested in gold, real estate and the dollar.”

Turkey’s interest in cryptocurrencies has been growing steadily for several years, largely because of limited resources with a reputation for being immune to inflation.

So far, Ankara has taken no action to regulate or tax the digital currency space, adding to the appeal for Turkey’s young and tech-savvy population.

ErdoÄŸan recently reiterated calls for Turks to invest gold and foreign currencies kept under the mattress in order to support domestic financial markets. The country’s recent economic turmoil has had important implications for its ruling justice and development party: its support fell with the abrupt end of years of strong economic growth.

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At Sirius Coin, a cryptocurrency distributor near the gold merchants of Istanbul’s Grand Bazaar, Mehmet, 35, said business is booming. The owners of the store are preparing to launch their own purse by the end of the year.

“Everyone wants to get rich quick. The Turks are no exception to this, ”he said.

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