Erdogan Eyes On Bitcoin To Rescue Turkish Lira

Published: 9 February 2022
By Shofi Ahmed
Like many countries, Turkey has once banned crypto, but now Erdogan wants to chime into Bitcoin. He met the President of El Salvador Nayib Bukele (father is a reputed Imam), the first country to make Bitcoin legal tender, a national currency. But is the Turkish falling lira ready for it?
During the meeting, President Erdoğan directed his AK Party to analyse new developments, including cryptocurrency and the metaverse. He also instructed the party members to organise a forum to focus on these areas. “It is a sensitive subject, a good and meticulous study should be done,” said President Erdoğan. He discussed cryptocurrency and the metaverse at the Justice and Development Party’s central executive board meeting held under his chairmanship.
Mr. Bukele’s government became the first in the world to adopt bitcoin as a national currency said: “Greetings to everyone in Turkey from El Salvador, the land of #Bitcoin.” According to a Bloomberg report the Turkish government is looking to establish a central custodian bank to eliminate counterparty risk.
The owe of falling lira has hit people in Turkey. “We will live through a really hard quarter of 2022. It will be very hard for Turkish people,” said Mustafa Sonmez, a Turkish economist. The country’s annual inflation rose to 36.1% in December, from 21.3% in November, and economists expect official figures to climb to 50% in the coming months.
Turkish bitcoin trading
The Turkish currency lira has lost more than 40 percent of its value last year alone. People are said to be jumping into Bitcoin and crypto currency boats to sink in their savings. According to several experts, cryptocurrency trading volumes in Turkey are set to grow even more.
Cryptomania is booming in the country as lira’s value crashes. Back in December the final month of the last year trading volumes topped one million per day, after the central bank interest-rate cuts in the face of soaring inflation.
Tapping into the crypto market is made easy, with billboards and television spots increasingly advertising ways for the public to enter the crypto market. Up-to-date Bitcoin price is listed alongside the United States dollar and the euro on most television channels.
Crypto rally is rising phenomenally fast. “If crypto people in Turkey made their own political party, they would be the third-largest party in parliament,” said Sima Baktas, a lawyer specialising in cryptocurrencies and co-founder of CryptoWomen Turkey, a non-profit that holds crypto seminars and workshops to educate the public.
According to media reports it’s estimated that at least 14 million of Turkey’s 84 million people hold cryptocurrencies today. Increasingly on the rise, the crypto rally is said to be driven by a young population. A generation that is familiar with the online world and eager to find a way to protect their savings against lira depreciation.
Figuring out the exact number of investors in Turkey holding Bitcoin and cryptos is difficult as not all exchanges have made their data public. Experts have, however estimated that it is somewhere between 10 to 11 million people.
Expert thoughts 
The experts, however, believe that Erdogan is not Nayib Bukele and Turkey is not El Salvador. Erdogan no longer has an independent economic council to push back after firing a series of central bank governors who wouldn’t get in line. That makes the current wave of instability all the more dangerous for lira holders. Turkish currency is still in a deep crisis. President Erdogan is trying as best as he can to keep it afloat. Bitcoin becoming legal tender is not the solution to the Turkish lira crisis at this moment.
The Turkish president has recently appealed to the citizens to convert their foreign money into Turkish lira. The government went on to put incentives in place for Turks to convert their dollar deposits back into lira and this is working.