The Turkish lira – Turkey’s national currency – has been in free fall for three months and has lost around 35% of its value against the US dollar. This was the result of the president’s somewhat controversial policies and decisions, the most recent of which resulted in a daily decline of 15% against the US dollar.
In September, President Recep Erdogan also declared war on bitcoin, aiming to pave the way for the implementation of digital lira. Since then, Turkey has suffered major economic setbacks, as the leading cryptocurrency has increased its price by almost 40%. As such, MicroStrategy’s Michael Saylor advised locals to convert their fiat currencies into bitcoins to save themselves from the monetary chaos reigning within their country’s borders.
Turkey’s financial crisis worsens
Turkey’s financial situation is worrying to say the least, and its main problems stem from the crash of the Turkish lira. On November 23, it plunged to an all-time low of 13.44 against the greenback. This is a 15% drop for a single day.
The major drop was the source of inflation, which is currently around 20%. The prices of basic goods and services for Turks (a population of around 85 million) have skyrocketed, while their wages in local currency have been severely devalued.
The COVID-19 pandemic and controversial policies implemented by some governments have also caused inflation to rise. Mass printing of the US dollar, for example, pushed the rate in the US to nearly 6%. Yet the situation in Turkey looks much worse.
Having a national currency that loses its value on a daily basis could mean that the state will have even more difficulty tackling the mass pandemic and restoring its economy.
Speaking of the coronavirus, it should be noted that the country is one of the hardest hit with a number of new cases and recorded deaths. So far, more than 75,000 people have lost their lives, while almost 30,000 new cases per day.
The state’s economic and health crisis is so severe that tech giant – Apple – has temporarily suspended online sales of its devices inside Turkey’s borders. It is still unclear when the company will restore these services.
Erdogan’s controversial laws
Many believe that President Erdogan and his controversial orders have fueled this financial anarchy. Tim Ash – Senior Emerging Markets Strategist at Bluebay Asset Management – is one of them:
“Insane where the pound is, but it reflects the insane monetary policy settings that Turkey is currently operating in. “
The aforementioned 15% drop in the lira against the dollar came after President Erdogan doubled down on his rate-cutting policy in order to win his “economic war of independence.” These aggressive cycles aim to increase exports, investment in the region and jobs. So far, however, there has been little to no success, and Erdogan’s actions have received a massive backlash from opposing parties.
Turkey and Bitcoin
It was April 2021 when the local government banned cryptocurrency investors from using their holdings for payments. Authorities have also banned them from using digital assets “directly or indirectly in the provision of payment services and issuance of electronic money”.
Instead of driving people away from cryptocurrencies, the restrictions have had the opposite effect, and Bitcoin’s Google searches in the country have hit an all-time high.
In September, President Erdogan fired another blow on the digital asset industry by declaring war on BTC. True to his authoritarian rule, he wanted to pave the way for a central bank digital currency, which would be under full government control.
“We are at war with Bitcoin,” he said at the time. “Because we will continue on the road with our money, which is our fundamental identity in this business.”
Similar to what happened in April, people’s interest in bitcoin and alternative coins increased as the Turkish lira trended down against the dollar and other national currencies. At the same time, bitcoin has skyrocketed to an all time high, and although it has retreated slightly since then, it is still ahead of the greenback, unlike the lira.
Adopt BTC if you want to “prosper”
Turkey and its local currency may be in a state of shock, but bitcoin can help residents get back on their feet. That’s what Michael Saylor, CEO of MicroStrategy and prominent BTC bull, recently expressed.
“The Turkish lira traded at an all-time low of 12.50 lira to $ 1, after further depreciating 7% on Tuesday.”
If you want to survive, convert your working capital from TRY to USD. If you want to prosper, convert all your capital from TRY to #BTC.https: //t.co/HN0PoLIImg
– Michael Saylor⚡️ (@saylor) 23 November 2021
This is not the first time that Saylor has spoken on a macroeconomic level. Not so long ago, he hailed El Salvador’s decision to accept bitcoin as legal tender.
Saylor certainly knows a thing or two about converting a substantial portion of his (or his company’s) capital into bitcoin. His personal BTC stash and MicroStrategy’s holdings are currently worth over $ 5 billion.
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