The Tether stablecoin, which is pegged to the US dollar, is perceived to better preserve value than the local currency.

People in Turkey are increasingly turning to the crypto market as a safe haven amidst the devaluation of the lira currency. Following President Recep Tayyip Erdogan’s election win, which caused market instability, local demand for Tether, a stablecoin pegged to the US dollar, surged and has remained high.

While cryptocurrencies globally have faced regulatory crackdowns and falling prices, the lira has experienced even greater depreciation, reaching historic lows. The Turkish currency has fallen by 11% against the dollar in the past week as the central bank scaled back its intervention. (Bloomberg)

Since the previous election in 2018, the lira has lost 80% of its value due to Erdogan’s unconventional economic policies. In this context, stablecoins like Tether are seen as attractive because they aim to maintain a consistent peg with the US dollar.

Lira transactions accounted for a significant portion of cryptocurrency trading volumes in June, peaking at 18% in May. Regulations in Turkey have made it challenging to buy dollars or gold with the lira, leading people to invest in stablecoins to preserve the value of their wealth amidst high inflation.

Tether’s popularity in the Turkish market is evident, with its share of trading volumes on local exchanges being much higher than on global exchanges. This trend indicates strong demand for stablecoins in Turkey. Despite historically low trading volumes, the demand for stablecoins in Turkish markets has remained robust.

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