Can Bitcoin Be a Lifeboat for Locals?
The Turkish lira – Turkey’s national currency – has been in a state of freefall for the last three months and has lost around 35% of its value against the US dollar. This has been the result of the President’s somewhat controversial policies and decisions, the latest of which led to a 15% daily drop against USD.
In September, President Recep Erdogan also declared war on bitcoin, aiming to pave the way for implementing the digital lira. Since then, Turkey has suffered significant economic setbacks, while the primary cryptocurrency has increased its price by nearly 40%. As such, MicroStrategy’s Michael Saylor advised locals to convert their fiat currencies to bitcoin to save themselves in the monetary chaos reigning inside their country’s borders.
Turkey Financial Crisis Worsens
The financial situation in Turkey is concerning, to say the least, and its main issues are coming from the crash of the Turkish lira. On November 23, it plunged to a historic low level of 13.44 against the greenback. This was a decrease of 15% for a single day.
The major descend has been causing inflation, which is currently around 20%. Basic goods and services for Turks (a population of approximately 85 million) have soared in price, while their local currency salaries got severely devalued.
The COVID-19 pandemic and the controversial policies which some governments executed also caused rising inflation. The mass printing of the US dollar, for example, has increased the rate in the States to nearly 6%. Still, the situation in Turkey seems far worse.
Having a national currency that loses its value daily could mean that the state will have further difficulties fighting the mass pandemic and restoring its economy.
Speaking about the coronavirus, it is worth noting that the country is one of the worst affected by a number of new cases and recorded fatalities. So far, more than 75,000 people have lost their lives, while nearly 30,000 new cases daily.
The economic and health crisis in the state is so severe that the tech giant – Apple – temporarily suspended online sales of its devices inside Turkey’s borders. It remains unclear when the company will restore these services.
Erdogan’s Controversial Laws
Many consider that President Erdogan and his controversial orders fueled this financial anarchy. Tim Ash – Senior Emerging Markets Strategist at Bluebay Asset Management – is among those:
“Insane where the lira is, but it’s a reflection of the insane monetary policy settings Turkey is currently operating under.”
The aforementioned 15% drop of the lira against the dollar came after President Erdogan doubled down on his policy to cut down rates in order to win his “economic war of independence.” These aggressive cycles aim to increase exports, investments in the region, and jobs. So far, though, there has been a little-to-no success, and Erdogan’s actions have received massive backlash from the opposing parties.
Turkey and Bitcoin
It was April 2021 when the local government prohibited cryptocurrency investors from utilizing their holdings for payments. The authorities also disallowed them to employ digital assets “directly or indirectly in the provision of payment services and electronic money issuance.”
Instead of pushing the locals away from cryptocurrencies, the restrictions had the opposite effect, and the Bitcoin Google searches in the country hit an all-time high.
In September, President Erdogan fired another shot at the digital asset industry by declaring war on BTC. True to his authoritative rule, he wanted to clear the path for a central bank digital currency, which would be under total control by the government.
“We are in a war against Bitcoin,” he said back then. “Because we will continue on the road with our money, which is our fundamental identity in this matter.”
Similar to what happened in April, people’s interest in bitcoin and the alternative coins surged while the Turkish lira went on a downtrend against the dollar and other national currencies. At the same time, bitcoin skyrocketed to an all-time high, and even though it has retraced slightly since then, it’s still well ahead against the greenback, while the lira is not.
Embrace BTC If You Want to ‘Thrive’
Turkey and its local currency might be in a knockdown state, but bitcoin can help the residents get back on their feet. That is what Michael Saylor – MicroStrategy’s CEO and a prominent BTC bull – opined recently.
“The Turkish lira traded at an all-time low of 12.50 lira to $1, having depreciated another 7% Tuesday.”
— Michael Saylor⚡️ (@saylor) November 23, 2021
This is not the first time when Saylor has aired his thoughts on a macroeconomic level. Not long ago, he praised El Salvador’s decision to accept bitcoin as a legal tender.
Saylor certainly knows a thing or two about converting a substantial portion of his capital (or his company’s) into bitcoin. His personal BTC stash and MicroStrategy’s holdings currently are worth more than $5 billion.