The value of the Turkish lira has plunged to a 2018 low following the imposition of sanctions on the country by U.S. President Donald Trump.
The lira has fallen 80% against the dollar since the start of the year, losing 27% in the last week alone and plunging to an all-time low against the dollar. The economic uncertainty and rising inflation, has forced Turkish merchants to find refuge in bitcoin, many of them preferring the foremost cryptocurrency over their severely weakened fiat currency.
As a result of the increased demand for bitcoin, some local digital exchanges platforms have seen their trading volume rise by as much as 150% in the last week with the price of bitcoin jumping to seven-month high against the lira, on Monday.
Koinin, Turkey’s largest crypto exchange platform has seen its Bitcoin trading volume go up by 63 percent while Paribu, another Turkey-based platform, has witnessed a 100 percent spike in its 24-hour trading volume.
Turkish-U.S. relations have broken down in recent months over Turkey’s refusal to release an American pastor in its custody who is being held on accusations of working as a spy and trying to bring down the Turkish government. Washington in turn responded by announcing huge tariffs on Turkish steel and aluminum imports.
The Turkish government has since rolled out a number of policies meant to halt the slide of the lira but the crisis appears far from over. Last week, we reported that Iran responded to similar U.S. sanctions by setting up a committee to explore the possibility of issuing a national state-backed cryptocurrencies to eliminate its dependency on the U.S dollar despite the fact that digital money is banned in Iran.
But unlike Iran, crypto is legal in Turkey with local exchanges enjoying the support of the banking establishment. Indeed, Turkey has the highest percentage of cryptocurrency ownership in all of Europe.