The Turkish lira’s ongoing decline against the U.S. dollar has prompted a surge in local demand for stablecoins, particularly Tether (USDT), as investors seek refuge from the country’s economic uncertainties. Despite the global crackdown on cryptocurrencies and falling prices for major tokens, stablecoins have become an attractive option in Turkey, where the lira has suffered significant losses.
According to data from Kaiko, lira transactions accounted for 10% of total cryptocurrency trading volumes in early June, peaking at 18% in May. This represents a notable increase from the 4% recorded at the beginning of 2023. Stablecoins, designed to maintain a consistent peg with the U.S. dollar, have gained popularity as they offer a potential safeguard against the lira’s depreciation.
Ebru Güven, an Istanbul-based university lecturer and former banker, highlighted the challenges Turkish citizens face when attempting to purchase dollars or gold due to regulatory hurdles. “Investing in stablecoins allows people to keep the value of their wealth; it’s one of the ways to hold on to some value when inflation is this high,” Güven explained. She further emphasized that stablecoins, such as Tether, have become the primary motivation for individuals seeking to preserve their purchasing power in the face of soaring inflation.
The growing demand for USDT in Turkish markets
The steady demand on Turkish markets underscores the allure of stablecoins. Data from CoinMarketCap indicates that Tether’s share of trading volumes on BTCTurk, one of the largest Turkish crypto exchanges, stands at 20%, while it is merely 1% on Binance, the world’s leading digital asset exchange. This stark contrast reveals the strong demand for stablecoins among Turkish investors.
Despite historically low trading volumes, demand for stablecoins on Turkish markets has remained robust, as Dessislava Aubert, an analyst at Kaiko, observed. In May, Tether’s share of trading volumes on local markets reached its highest level since 2020, indicating a strong preference for stablecoins among Turkish investors.
The uncertain economic outlook and the lira’s persistent depreciation have compelled Turkish individuals and businesses to explore alternative avenues to protect their wealth. Stablecoins, with their stability and ties to the U.S. dollar, have emerged as a reliable haven for investors seeking to preserve the value of their assets amidst the country’s economic challenges. As the global crackdown on cryptocurrencies continues, Turkey’s crypto market is witnessing a unique surge in demand for stablecoins, reinforcing their position as a valuable asset class in the eyes of Turkish investors.
