Turkey has now become an astounding crypto hub, where the Turkish Lira is estimated to play a weighty role in the global crypto market – as significant as the Euro. What makes this country such an important player in the world of digital currencies?
Growth and Transformation of the Turkish Crypto Market
In the early 2020s, the Turkish crypto market underwent a rapid transformation. Until 2020, the domestic exchange BTCTurk dominated with a 95% market share. However, since then, the international platform Binance has surged to the forefront, introducing new trading pairs with the Turkish Lira.
According to estimates, the cumulative trading volume in Turkish Lira had already reached $95 billion by July this year – roughly equivalent to the entire 2023 turnover. The Lira’s share even reached a record 16% of global crypto trading volume in June, making it the fourth-largest fiat currency in the crypto market after the Dollar, Korean Won, and Euro.
Tech-Savvy Youth Driving the Boom
What are the reasons behind this rapid development? On the one hand, it is attributed to the high inflation in Turkey, and on the other, to the problems that large exchanges like Binance have faced with other fiat currencies like the British Pound or Australian Dollar.
However, beyond these macroeconomic factors, the vibrant crypto scene in Turkey also plays a crucial role. According to studies, half of the Turkish population has already invested in cryptocurrencies, many of them tech-savvy or „unbanked“ young people. The government in Ankara also has ambitious plans to further promote blockchain and cryptocurrencies in the coming years.
Inflation, Trade Restrictions, and Sanctions as Drivers
Alongside these positive factors, there are also challenges that are driving the Turkish crypto boom: the extremely high inflation, trade restrictions, and financial sanctions.
The Turkish Lira has lost over 80% of its value against the Dollar in the last 5 years. Due to government measures, the Lira is overvalued, leading to soaring prices for tourists. Many travelers are therefore opting for the cheaper Greece instead.
At the same time, Turkish companies are suffering from the sanctions against Russia. For a long time, Turkey was able to profit from trade with Russia as a neutral actor. However, now the threat of U.S. secondary sanctions is pushing many firms into liquidity problems.
Cryptocurrencies as a Lifeline?
In this environment, cryptocurrencies could gain attractiveness for both companies and consumers. As cross-border, decentralized means of payment, they may offer a way out of the problems with the financial system and the national currency.
However, there are only a few reports so far that crypto is actually being used to circumvent sanctions or for money laundering. The regulation of the crypto sector in Turkey is still considered inadequate, although this could change with new laws.
Conclusion: Unexpected Crypto Hub with Potential
In summary, Turkey has unexpectedly developed into an important crypto hub. Driven by macroeconomic factors like inflation and sanctions, but also by a tech-savvy population, the country is establishing itself as a globally relevant player in the world of digital currencies.
Whether cryptocurrencies can ultimately serve as a lifeline for consumers and businesses remains to be seen. However, it is clear that the Turkish crypto market continues to be an exciting field of observation for investors and analysts.
Disclaimer: This article is for informational and educational purposes only. It does not constitute investment advice and should not be used as a basis for financial decisions.
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