Will Turkey’s love for cryptos continue?
It hasn’t been a smooth ride for cryptocurrencies this year, as some investors had hoped for. Bitcoin rose spectacularly last year to hit nearly $20,000 and then plummeted equally dramatically. But things are not as bad as they appear on the surface.
While the U.S. is still struggling to find the right mix of caution and enthusiasm in dealing with cryptocurrencies, there are some emerging markets which are making rapid strides in opening the cryptocurrency market.
Finding solace in cryptocurrencies is Turkey , which is going through really tough times. According to a recent Statstica report, about 18 percent of the population have invested in cryptocurrencies in recent years. Based on a survey conducted by Statistca on 15,000 individuals, Turkey has the highest percentage of population that has invested in the crypto market.
But the question remains: is this trend going to continue in the future?
Need to have independent financial systems
Earlier this month, the US government imposed additional sanctions on the Turkish economy, excluding Turkey from the global banking system operated by SWIFT in Belgium. It has been an ongoing practice employed by the US government to leverage the SWIFT banking system to alienate countries like Iran and Turkey from the global financial system.
According to a news report by CCN last week, Germany is intent on building a financial system that is independent of the U.S.
In response, Heiko Maas, the German foreign minister said:
“For that reason it’s essential that we strengthen European autonomy by establishing payment channels that are independent of the US, creating a European Monetary Fund and building up an independent Swift system.”
As there is a growing consensus among countries for the establishment of independent financial systems, the merit of crypto as a borderless, free, anti-censorship, and decentralized financial network will appeal to a larger group of consumers.
Is falling lira one of the reasons?
Turkey has been going through an economic crisis which has seen its currency lira fall by over 50% against the U.S. dollar, as a result of trade sanctions imposed by the U.S. The situation further worsened when Turkey refused to release American pastor, Andrew Brunson, who is facing espionage charges in Turkey.
The political problems soon engulfed the entire nation and took shape of an economic calamity, as converting lira into other reserve currencies like dollar was no longer an option for businesses. This has led to a sense of doom among the business fraternity and Turkish citizens.
A 58-year-old retiree speaking to Bloomberg about the currency woes, said:
“I have respect for our president, but I can’t sell my gold and foreign currency just because he made that call. I’ve cut down on food for those savings.”
Lira's low liquidity and strict government control over the the currency has further complicated the issue for citizens. This is the main factor that is driving individuals towards digital currencies. Virtual currencies can help them bypass SWIFT and transactions using these coins are swifter and remain anonymous.
But there's some good new for the lira on the anvil. According to a report by Bloomberg on August 31, the lira rallied after the policy makers in Turkey raised taxes on dollar deposits, making it more attractive for investors to plough money into the local currency.
Image via Shutterstock
Join our Telegram group