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Turkey Embraces Bitcoin as Inflation Hits 24-Year High

2 mins
Updated by Geraint Price
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In Brief

  • Turkey’s annual inflation rate has reached 78.62%.
  • The Turkish lira has been losing its power, and as such, citizens have been turning to crypto.
  • BTC volume on LocalBitcoins has increased significantly in Q1 and Q2 2022, compared to Q4 2021.
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Turkey’s inflation rate has hit its highest level in 24 years, with the annual inflation rate now at 78.62%. The Turkish Statistical Institute published the figure, with the monthly increase being 4.95%.

There are several reasons why the inflation rate has risen to such an astronomical figure, including the increasing cost of energy and the weakening Turkish lira. Other countries have also faced similar inflation rate spikes, with the European Central Bank set to increase the interest rate for the first time in 11 years.

Turks turn to BTC as an inflation hedge

While the lira has been weakening, the amount of BTC volume on LocalBitcoins in the region has been growing considerably. BTC peer-to-peer trading volumes in the first quarter and second quarter of 2022 have seen massive increases compared to the fourth quarter of 2021.

In the first quarter of 2022, LocalBitcoins trading volume has increased by 51% over the fourth quarter 2021, while second quarter 2022 trading volume has increased by 40%. These are substantial increases that indicate that the public is turning to cryptocurrency to protect their financial positions.

In the midst of all of this economic turmoil, the Turkish government is turning to various measures. But still, all demographics are turning to crypto, and neither age nor gender affecting the decision to invest in crypto.

Turkish government turning to gold savings

President of Turkey Recep Tayyip Erdoğan has made his dislike for raising interest rates known, calling interest rates the mother of all evil. This has led to the decline of the Turkish lira, and the country may have to take drastic measures to contend with the issue.

To combat inflation, the government has revealed a scheme that will bring gold savings at home into the banking system. The gold conversion deposit account will offer risk-free incomes, the government says. It estimates that there is approximately $250 to $350 billion in gold in homes.

Turkey outlawed crypto payments in 2021, but that does not seem to have stopped citizens from investing in it purely as an asset class. Should the struggle continue, it will only be more likely that crypto investments grow. Individuals have often turned to crypto as a hedge against inflation, though that argument seems to be losing its strength.

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Rahul Nambiampurath
Rahul Nambiampurath's cryptocurrency journey first began in 2014 when he stumbled upon Satoshi's Bitcoin whitepaper. With a bachelor's degree in Commerce and an MBA in Finance from Sikkim Manipal University, he was among the few that first recognized the sheer untapped potential of decentralized technologies. Since then, he has helped DeFi platforms like Balancer and Sidus Heroes — a web3 metaverse — as well as CEXs like Bitso (Mexico's biggest) and Overbit to reach new heights with his...