Bitcoin could be losing compared to the US dollar, but it is gaining against the Turkish Lira. The primary cryptocurrency is heavily being endorsed in Turkey as a store of value because of the rising inflation rates.
Turkey is currently witnessing a sharp decline in interest rates, attributed to the declining value of the Turkish Lira. As such, the value of the country’s fiat continues to deteriorate compared to Bitcoin and other fiat currencies and assets.
Turkey Lira on a decline
A report from Reuters has established that the Lira tumbled by 5.6% against the USD on December 16. The decline in the Lira was simultaneous to a reduction in the 100 basis point policy rate from the Turkish central bank.
The Lira has been on a decline over the past four months, dropping by 47% against the US dollar. One Lira was worth 8.29 against the dollar in September, but it is now worth 15.6.
To mitigate the rising inflation, the President, Tayyip Erdogan, has adopted some policies to buffer against the increasing interest rates. However, the policies are not aiding the Lira and Turkish residents and now disposing of their fiat to prevent their wealth from becoming valueless. Erdogan has also increased the minimum wage and given priority to lending and exports to boost the economy’s recovery
Currently, the global financial market is recording high rates of inflation. The level of inflation in the US is at the highest level in 30 years. The Fed Reserve chair, Jerome Powell, wants to reduce bond purchases to prevent it from escalating.
Bitcoin winning against the Lira
Bitcoin continues to gain adoption as a hedge against inflation. Because of its capped supply, the argument has been that it be used by countries such as Turkey battling hyperinflation.
Currently, Bitcoin is losing against the US dollar, as it is 25% below its all-time high. However, the coin recently hit a record high against the Lira after peaking at around $799,000 per coin. Data from Google Trends also shows that interest in cryptocurrencies in Turkey has significantly increased in 2021.
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