Bitcoin Price Drops Against Turkish Lira as actions are taken to Calm Investors

The Turkish Lira has been a hot topic during the recent weeks. Even though, Fiat-Currencies are supposed to be stable against Bitcoin. This is not always the case. By looking at a chart of US dollar to Turkish Lira, you can see that between 9th of July to 13th of August, US Dollar gained 50% in value compared to the Lira. The increase represents a huge move and is similar or even greater to the spikes we have seen in the US dollar compared to Bitcoin.  

Toshi Times recently wrote an article about how Turkey is becoming one of the first casualties of Donald Trump’s burgeoning trade war with the rest of the world. American tariffs and sanctions have led to deteriorating relations between the two countries and effectively doubled the price of Turkish steel and aluminium imports to the US, causing a lira sell-off which against the Lira with more than 90% since February.

By looking at a chart of Bitcoin compared to Turkish Lira, we can see that during the past two months Bitcoin gained 70% on the Turkish currency. The BTC/TRY recorded a 22 percent drop since establishing its intraday high at 45382-fiat. A political act between the Turkish and U.S. governments last week had influenced the latter to double the tariffs on Turkish steel and aluminium. As a result, Lira lost value to a record low of $0,139 on Monday, shaking the economy further. 

The past days, Lira gained strength because Qatar calmed the market with the promise to issue loans of $15 billion to improve the Turkish economy. TRY/USD rose 6% on the news. Berat Albayrak, the finance minister who addresses over 2,000 institutional investors further improved the fundamentals of the currency by announcing a new economic model for the country.   

Will Cryptocurrencies and Bitcoin be a haven for investors?

What is interesting about the action we have been seeing, is that, on the day Lira dropped, two of the most significant exchanges in Turkey reported over 100 per cent in increased volume. BTCTurk rose the most and showed more than a 130% rise in Crypto volume. 

Bitcoin began to fall after the Qatar announcement which is indicating that people took shelter under decentralised assets during the Turkish Liras uncertainty and the country’s unstable financial environment. This is not the first time we have seen instability in countries; Venezuela, China, India, and Greece are examples of countries that have seen people flocking to cryptocurrencies when being subjected to capital restrictions, hyperinflation, and demonetization.

However, Holger Shmieding, Turkey could still avoid a recession with swift and deft policy adjustment,

“With a swift and deft policy adjustment, Turkey may still get away with a period of below-trend growth instead of a recession. So far, Turkey does not seem to be changing its policies fast enough, though. As a result, the risk is mounting that the Turkish economy may contract for a while.”

Turkey still has time to solve the issues but should the situation continue to get worse, the country’s libertarians would potentially prefer to park their money into non-government assets.

Image Source: “Flickr”

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