Bitcoin’s perceived role as an inflation hedge is competing with Altcoin speculation and exposure to the US dollar through Tether
Turkish citizens, facing high inflation and a falling currency, are avoiding the example set by some foreign public companies that have adopted Bitcoin as a store-of-value asset. Instead, they are switching to alternative cryptocurrencies like Shiba Inu (SHIB) and Stablecoin Tether (USDT).
Trading volume in the currency pair Bitcoin/Turkish Lira on the Exchange Binance totaled $918 million in November, less than one-fifth the level of the value of Shiba Inu/Lira’s $5.26 billion and Tether-Lira of US $5.58 billion.
According said Strahinja Savic, head of data and analytics for the FRNT Financial cryptocurrency platform:
The data show that despite the instability faced by Lira, local traders are still attracted by the exceptional returns associated with currencies like the SHIB
In November, the Lira fell nearly 40% against the dollar after the Central Bank cut interest rates even as inflation reached 20% and the US Federal Reserve began to scale back its asset-buying program to increase liquidity. The currency has devalued about 87% this year and is on track to record its ninth consecutive annual decline.
SHIB, with its massive supply of 1 quadrillion tokens, is exceptionally cheap compared to major currencies. SHIB / TRY was trading near 0.00049 Lira on Binance at the time of this release, while BTC / TRY was changing hands at 686,580 Lira.
Although payments with cryptocurrencies are prohibited in Turkey, owning cryptocurrency is legal. However, the growing popularity of Tether and other cryptocurrencies could attract regulatory wrath, as increased capital flight through these non-bank channels could increase the Lira’s devaluation.
According to FRNT’s Savic:
Traders in Turkey may be using Tether as a proxy for dollar exposure. Tether, the world’s largest stable currency by market value, is supposedly backed by a basket of reserves and is indexed 1:1 to the dollar. It is widely considered a representation of the digital dollar that can be moved freely across exchanges and national borders, bypassing traditional banking channels.