Turkey’s inflation is becoming increasingly worrisome, as the nation’s Lira keeps plunging in value. In November, the country’s Statistical Institute revealed inflation rate rose to a little above 20% from about 19% records in October, representing over 1% increase.
In any country, the strength of the country’s banknote is one of the factors that contribute to inflation. On most occasions, a strong currency translates to a low inflation rate, while a weak one, as in the case of Turkey presently, could likely increase inflation.
In 2021 alone, Lira depreciated 87%, more than any other year recorded. In November, the currency crashed against the USD massively by 40%, and is in line to record its ninth consecutive annual drop.
Turks Turn To Crypto Assets
Due to the falling Turkish Lira and rising inflation, citizens have decided to turn to certain digital assets as their new store of value. According to reports, the meme coin Shiba Inu and Stablecoin Tether have become alternatives for the citizens.
This comes as a surprise considering the value of the two cryptos. Historically, Bitcoin has been the most favored digital asset as a store of value to many, but considering the recent price plunge that has left many traders and investors somewhat disappointed, many are diverting to other assets. It makes sense that Turks didn’t opt for flagship crypto.
Binance reports that BTC/TRY trading volume for November was $918M, while that of SHIB/TRY and USDT/TRY were $5.26B and $5.58B respectively. Comparing the trading volumes, the BTC pair is almost one-fifth of SHIB and USDT trading pairs, further proving that many Turks are tilting away from BTC trading.
An analyst at FRNT Financial Strahinja Savic, said that the data explicitly reveals that local traders are impressed with the returns on SHIB and USDT, thus the reason for their high trading volumes. The same can’t be said of BTC, which is currently trading below $47k amid market correction.
A crypto investor and a textile trader Sabri Aygun lamented the current inflation rate in the country as appalling. Aygun stated that although the inflation rate is officially put at 21%, it’s more like double of that in reality.
The trader disclosed that the citizens are not only investing in SHIB, XRP, and other cheap coins, but are also investing in gold and the US Dollar. The consistent fall of Lira has led to the massive gain of the dollar, which comes as no surprise that Turks are buying into the powerful currency.
The Fate of Crypto Adoption
Despite the growing adoption of SHIB and other crypto assets amongst Turks, it’s unlikely that they will become officially adopted by Turkey. The nation is one of the countries that placed a ban on crypto payments, although owning virtual currencies is permitted.
SHIB is currently trading at 0.0004775 on Binance against the Lira, while BTC is trading at approximately 676,000 Liras. SHIB/TRY and BTC/TRY are both down 5.13% and 2.73% in the last 24 hours.