Over the last decade, the Turkish Lira has been slowly falling against other fiat currencies. Many citizens noticed the reduction of the buying power they had because their national currency started succumbing to inflation with some prices going up by 1200% since 2019. It has been a rough period for the whole country.
The troubled history of Turkey’s fight against inflation
The inflation rate in Turkey had been quite high (above 13% on average) yet stable and manageable up until 2018 when it skyrocketed to 24%. Some efforts from the government curbed the growth and it was kept under 20%. However, the impact of the COVID-19 pandemic and the ongoing Ukraine-Russia war devastated the economy with inflation hitting a record 80% in Summer 2022.
The 50 thousand Turkish Lira in 2019 was enough to buy a new budget car like Volkswagen Golf or Polo. Today, it is barely enough for the latest generation of smartphones. You won’t be able to buy the new iPhone 14 in October for 55 thousand Lira. It is a massive drop in purchasing power that Turkish households have been experiencing first-hand during the last three years.
The trend seems to be global. The US, Canada, the UK, and Australia are highly developed nations struggling to keep inflation at bay. Less stable economies are struggling even more. We know about the tragic stories of Venezuela, Argentina, Sri Lanka, Sudan, and many other countries that have very high inflation rates.
Cryptocurrencies are favored by people in struggling economies
What unites many people in those countries is that they see cryptocurrencies as the best hedging option against the rampant decay of their national economies. Peruvian citizens are trading Bitcoin quite passionately with new crypto exchanges popping up here and there. Many locals are choosing to immediately swap their fiat money for Sol-pegged PEN and other crypto assets. The same is happening in other economies that cannot manage inflation.
We are seeing a very clear tendency across all nations with millions of people choosing crypto over their national currencies as the anxiety about the future of the global economy continues to mount. Turkey seems to be in this category and its Bitcoin trading volume has been steadily growing too.