Bitcoin in Turkish, anyone?
The Lira, the currency of Turkey, has been making headlines this week as it drops to new lows versus the US dollar. In contrast, bitcoin, a cryptocurrency that has seen large drops and wild price fluctuations since the beginning of this year, seems to be doing well. In terms of the Turkish Lira, it reached a 7-month high yesterday.
In the previous 10 days, the Turkish Lira‘s price has fluctuated more than bitcoin’s, according to a Bloomberg investigation. The last time this occurred was just after Turkey’s 2017 constitutional vote, which strengthened President Recep Erdoan’s control over the nation. A day before the vote back then, the Lira plummeted sharply by 9% before rebounding when the results were announced. The price of bitcoin increased by 2% during the same time frame. (See also: Turkey ETF Could Face Problems.)
What Is Behind the Falling Turkish Lira?
Undoubtedly, there are very distinct dynamics at play in the currency markets and those affecting cryptocurrencies. The novelty of bitcoin as a currency has contributed to its depreciation. Within the framework of finance, economists and traders are still working out its subtleties. As a result, news events and regulatory statements have a big impact on how its price changes. The recent decline of the Turkish Lira has been attributed to a mix of an outflow of foreign investors and economic incompetence by the president of the nation.
When interest rates in the West were low, investors poured money into developing market currencies. But as important economies, including the United States, have begun to move toward higher interest rates, this dynamic has recently shifted. Investors have lost trust in Turkey’s economy as a result of Erdoan’s economic strategy of burdening the nation with debt-financed infrastructure projects, particularly as it marches toward a collision course with the US.
Is It A Good Idea To Sell Bitcoin For Turkish Lira?
Bitcoin continues to outperform the Turkish lira in terms of total decrease. According to a Bloomberg calculation at the time the story was published, the Turkish Lira had fallen by 45 percent over the course of the year, while bitcoin had fallen by 55 percent. As of this writing, the latter is already shown signs of recovery while bitcoin is still struggling.
