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Following strong US government sanctions against Turkey last week, Bitcoin-Turkish Lira (BTCTRY) exchange rate rose today to 47,192 – its highest level since January 21, 2018. Turkish citizens seek shelter in cryptocurrency for their endangered economy.
The United States Tariffs Rock Turkey’s Economy
The trading volume of the Turkish currency market rose sharply on Friday, as the lira (TRY) fell to a record low. TRY fell 27% last week and reached an all-time low of 7.20 per dollar.
Import sanctions announced by US President Donald Trump – backed by the White House – seek to double tariffs on metals in Turkey. So far there has been no confirmation of the new US Department of Commerce tariff policy.
The problem with Turkey began after a delegate from Washington returned without an agreement in the case of the arrest of US Pastor Andrew Brunson. Brunson was accused of supporting one of the groups involved in the attempted coup in 2016 to overthrow Turkish President Recep Tayyip Erdogan.
In July, Trump threatened to impose “severe sanctions” on Ankara, the capital of Turkey, if they refused to release Brunson. As early as August 1, the White House announced sanctions against Turkey’s justice and interior ministers, prohibiting US citizens from doing business with them.
Turkish Citizens Take Refuge in Cryptocurrency After Fall of Their Currency
Faced with threats of sanctions, Turkish President Recep Tayyip Erdogan asked his citizens to convert their dollars and other foreign currencies, as well as their gold holdings, into lira.
“Change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks. This is a domestic and national struggle. The economic attack against us now is the same as the coup attempt against us. I’m urging our country to increase outputs, to increase exports,” Erdogan said, according to an Associated Press translation.
As the government attempts to restore investor confidence in the lira, the country’s largest crypto exchange Koinum announced a 63% increase in the volume of Bitcoin (BTC) trade. While others exchanges like Paribu announced a rise of up to 100% and BTC Turk up 35%. Turkey is home to one of the largest communities of crypto adopters in Eastern Europe.
An event like this gives the global community an understanding of the importance of Bitcoin; countries now have an option when uncertainty arises. This option is why Venezuela was one of the first countries to heavily use BTC and also why the early adopters were often proponents of the #EndTheFed movement. Bitcoin provides an exit strategy for those who don’t have faith in their governments. The response of Turkish adopters to buy cryptocurrency as protection against political and financial instability is a response that we will see repeated around the globe as government-backed fiat fails – after all, money is only truly backed by consumer confidence.