The euro-dollar is no longer the most popular currency pair

After the dollar, the euro or even gold, the Turks have found their new solution to deal with the extreme devaluation of their local currency. Tether, a stablecoin backed by the US dollar, became, along with the Turkish lira, the most traded currency pair in the world last fall, overtaking the euro-dollar, according to data from Chainalysis.

Explained more simply, more and more Turks are turning to a virtual currency to invest their savings, which would lose all interest in remaining in Turkish lira, while the latter is seeing its value collapse. Since September 2021, the national currency has lost 27% of its value against the dollar, knowing that its devaluation is not a new topic.

“Insane rate policies, diminishing confidence in published inflation statistics and political decisions…have made cryptos a safe haven, even though cryptos are rather risky and volatile financial assets”, said Kağan Şenay, a trader of 27 years in Bursa in the northwest of Turkey, in the pages of the Wall Street Journal.

Real inflation over 27%

Inflation is the second trigger for this rush to cryptocurrencies. In Turkey, far ahead of the official figures, inflation would have reached 82, 8% over one year (ENAG figures). But the measures of President Erdogan, constantly against the recommendations of the central bank based in Ankara, have created serious problems.

To counter the devaluation of the pound, the head of State has not found better than to dip into public coffers and engage with households. In one week, at the end of 2021, the State’s net reserves had gone from ,2 billion to $8.6 billion.

In the shadow of the popularity of Tether, cryptocurrencies are not welcome in Turkey as the government implemented a ban on their use for payments in April 2021. But platforms specializing in exchanges continue to trade. Asked by the Wall Street Journal, the marketing director of the Turkish platform Bitlo said:

“The volatility of the Turkish lira and the rise in inflation observed in recent months have led our investors to view cryptocurrency as a profitable long-term investment and as a short-term inflation hedge.”