Since President Recep Tayyip Erdogan’s victory rattled markets, local demand for Tether, a dollar-backed stablecoin, has increased. This demand peaked at the beginning of May in anticipation of the elections. While there’s been a worldwide crackdown on the resource class and falling costs for the greatest tokens, the lira has fared surprisingly more dreadful, penetrating noteworthy lows as of late.
Stablecoins in Turkey’s lira market up 11% after Erdogan’s election
The Turkish currency has lost 11% against the dollar over the past week as the central bank has stopped intervening to help it recover from the vote. Erdogan’s unconventional economic policies have resulted in the lira losing 80% of its value since the previous election in 2018, including attempts to reduce inflation by as much as 80% through interest rate cuts.
Because these tokens are designed to maintain a consistent peg with the US dollar, crypto assets like stablecoins are seen as more appealing in this setting. According to data from Kaiko, Lira transactions accounted for 10% of all cryptocurrency trading volumes in the $1.1 trillion a day market at the beginning of June, after reaching a peak of 18% in May. The data provider stated that this compares to 4% at the beginning of 2023.
Tether stablecoin trading volumes up after record-high inflation in Turkey
According to university lecturer and former banker Ebru Güven, regulations have made it difficult to purchase gold or dollars using the lira. One way to keep some value when inflation is this high is to invest in stablecoins, which allow people to keep the value of their wealth. People are currently only motivated to purchase stablecoins by this. Tether’s share of trading volumes on BTCTurk, one of the largest Turkish cryptocurrency exchanges, stands at 20%, compared to 1% on Binance. This indicates that demand for stablecoin is strong in Turkish markets. Turkish State Banks Resume Lira Defense After Record Drop
Tether is booming in Turkish markets as Erdogan’s presidency gets underway
Graphic designer Batuhan Basoglu, 28, trades cryptocurrencies on Binance and invested all of his savings in stablecoins and other cryptocurrencies. “Due to the uncertainty surrounding the currency’s future, I felt the urge to convert my Turkish lira to US dollars just before the election. I bought Tether to protect myself from this risk,” Basoglu stated. Erdogan’s Wall Street team gets a bad reception in foreign markets. As the lira fell even further, Basoglu went all in on the stablecoin rather than converting those Tether tokens back into lira.
Dessislava Aubert, an analyst at Kaiko, wrote in an email, “It’s noticeable that despite historically low volumes, demand for stablecoins on Turkish markets has remained robust.” Tie’s portion of exchanging volumes on neighbourhood markets arrived at its most significant level starting around 2020 in May, Aubert said.
Source: https://www.cryptoknowmics.com/news/the-tether-stablecoin-is-becoming-a-haven-for-turkish-investors