The Turkish lira, Turkey’s national currency, has been in free fall for the last three months, losing approximately 35% of its value against the US dollar. This has been caused by the President’s somewhat contentious policies and decisions, the most recent of which resulted in a 15% daily drop against the USD.
In September, President Recep Erdogan declared war on bitcoin, paving the way for the implementation of the digital lira. Turkey has suffered significant economic setbacks since then, while the primary cryptocurrency’s price has increased by nearly 40%. As a result, MicroStrategy’s Michael Saylor advised locals to convert their fiat currencies to bitcoin in order to avoid the monetary chaos that has erupted within their country’s borders.
Turkey’s financial crisis is escalating.
To say the least, Turkey’s financial situation is concerning, with the main issues stemming from the collapse of the Turkish lira. On November 23, it hit an all-time low of 13.44 against the US dollar. This represented a 15% decrease in a single day.
The major decline has resulted in inflation, which is currently around 20%. Basic goods and services for Turks (an estimated 85 million people) have skyrocketed in price, while their local currency salaries have been severely devalued.
Rising inflation was also caused by the COVID-19 pandemic and controversial policies implemented by some governments. The mass printing of the US dollar, for example, has pushed the rate up to nearly 6% in the United States. Nonetheless, the situation in Turkey appears to be far worse.
Having a national currency that loses value on a daily basis may mean that the state will have even more difficulty combating the mass pandemic and reviving its economy.
Concerning the coronavirus, it is worth noting that the country is one of the worst affected, with a high number of new cases and fatalities. More than 75,000 people have died so far, with nearly 30,000 new cases being reported every day.
The state’s economic and health crises are so severe that Apple temporarily suspended online sales of its devices within Turkey’s borders. It is unknown when the company will resume these services.
Erdogan’s Controversial Legislation
Many believe that President Erdogan’s controversial orders fueled the financial chaos. Among them is Tim Ash, Senior Emerging Markets Strategist at Bluebay Asset Management:
“It’s insane where the lira is, but it’s a reflection of Turkey’s current insane monetary policy settings.”
The lira’s 15% drop against the dollar came after President Erdogan doubled down on his policy of cutting rates in order to win his “economic war of independence.” These aggressive cycles aim to boost exports, regional investment, and job creation. So far, however, there has been little to no success, and Erdogan’s actions have received widespread condemnation from opposing parties.
Bitcoin and Turkey
The local government prohibited cryptocurrency investors from using their holdings for payment in April 2021. They were also forbidden from using digital assets “directly or indirectly in the provision of payment services and electronic money issuance.”
Instead of discouraging locals from investing in cryptocurrencies, the restrictions had the opposite effect, with Bitcoin Google searches in the country reaching an all-time high.
President Erdogan launched another salvo at the digital asset industry in September, declaring war on Bitcoin. True to his authoritative rule, he desired to pave the way for a central bank digital currency that would be completely controlled by the government.
“We are at war with Bitcoin,” he said at the time. “Because we’ll keep going with our money, which is our fundamental identity in this matter.”
People’s interest in bitcoin and alternative coins increased, similar to what happened in April, while the Turkish lira fell against the dollar and other national currencies. At the same time, bitcoin reached an all-time high, and while it has since retraced slightly, it is still well ahead of the greenback, whereas the lira is not.
If You Want to ‘Thrive,’ Embrace BTC
Turkey and its local currency may be in shambles, but bitcoin can help residents get back on their feet. That is what Michael Saylor, the CEO of MicroStrategy and a prominent BTC bull, recently stated.
“The Turkish lira traded at an all-time low of 12.50 lira to $1, having depreciated another 7% Tuesday.”
If you want to survive, convert your working capital from TRY to USD. If you want to thrive, convert all your capital from TRY to #BTC.https://t.co/HN0PoLIImg
— Michael Saylor⚡️ (@saylor) November 23, 2021
This is not the first time Saylor has expressed his views on macroeconomic issues. He recently praised El Salvador’s decision to accept bitcoin as legal tender.
Saylor certainly knows a thing or two about converting a sizable portion of his (or his company’s) capital into bitcoin. His personal Bitcoin holdings and MicroStrategy’s holdings are now worth more than $5 billion.