Bitcoin hits $100,000 in Türkiye as Lira plummets!

The Turkish lira plummeted against the US dollar at the opening on the 22nd, with a drop of more than 15% at one point, falling to 8.485 liras per dollar, approaching the historical record low. Turkish President Erdogan ordered the removal of hawkish central bank governor Naci Agbal on the 20th and appointed Sahap Kavcioglu as the new governor, raising concerns that the recent series of interest rate hikes may be reversed and damage the credibility of the central bank. The sky-high price of Bitcoin appeared after the price of the Turkish lira fell sharply. Currently, the cost of buying a Bitcoin in Turkey's peer-to-peer crypto market has soared to more than $100,000.

According to data from LocalBitcoins.com, the lowest asking price for Bitcoin has reached 509,840 Turkish liras (about $64,000). At the same time, the asking price on some offline exchanges has risen to $100,000, almost twice the global asking price.

In countries experiencing disastrous economic policy shifts, Bitcoin has become an attractive hedge because it is outside the purview of governments and central banks. Hyperinflation in Venezuela and Zimbabwe, the Greek debt crisis, and China’s capital controls have boosted the value of Bitcoin in the past.

This time is no exception. After the Turkish lira fell, Google searches for the keyword "Bitcoin" almost doubled.

Google Trends: 'bitcoin' searches triple in Turkey

“If currency devaluation enables a country and its citizens to enter Bitcoin earlier than others, then it could be a blessing in disguise,” said Marc van der Chijs, a Netherlands-based macro investor.

Meanwhile, the appointment of a new governor has prompted analysts and investors to predict that Turkish assets will come under pressure for a sharp sell-off that could wipe out all the gains made during Agbal's tenure.

Robin Brooks, chief economist at the Institute of International Finance think tank, said Türkiye is at risk of a large capital outflow. This, in turn, will further weaken the lira, which will bring more upside opportunities for Bitcoin.

As for the lira, Max Lin, emerging market currency strategist at NatWest Markets, told the Wall Street Journal that Akar's removal is a sign that President Erdogan does not want to raise interest rates to curb Turkey's explosive inflation. The lira is now likely to fall further due to its current reduced competitiveness.

Edward Al-Hussainy, senior rates and currency analyst at Columbia Threadneedle, further emphasized that Turkish assets will come under tremendous selling pressure as investors limit their risk exposure to Turkey's highly inflated market.

“It would be painful to remove macro policies that have been temporarily appropriate,” he told the Financial Times.

Image credits: GoogleTrend; TradingView; LocalBitcoins.com

By Sara Zhang

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