The Turkish lira continues to fall, and with it, the U.S. markets. Worries over a fragile Turkish economy and risk of contagion in Europe sent markets into a tailspin on Friday. With it, the lira fell another 17% against the U.S. dollar.
Part of the reason for the decline was due to increased tariffs from President Trump.
“I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time,” President Trump tweeted.
That follows Turkey’s request for all citizens to convert their dollars into foreign dollars. The country also wants citizens to convert gold holdings into lira. While we wait out the tension, it’s best to stay on the sidelines to see if we’ll see further chaos with the lira, or calm, which could send markets higher in a relief rally.
However, as the chaos unraveled, trading volume on Turkey’s cryptocurrency exchanged surged.
Turkish Exchange Volume Jumped 100%
According to Coin Market Cap, trading volume at Turkish exchanges, such as Parinu, Btcturk, and Koinim each saw volume up 100%.
That’s happening as many turn to cryptocurrencies because of the lira’s weakness, and because of political and financial turmoil.
At the same time, many investors no longer trust fiat currencies.
Then again, we have to consider that cryptocurrencies thrive during economic uncertainty, as some investors saw during the Venezuelan crisis. In fact, in July 2018, Dash (DASH) cryptocurrency had over 10,000 users in the country, who could spend their funds with over 500 merchants.
“If there were a global economic meltdown like the one that happened in 2008, the amount of money that would flow into crypto, would be in the trillions of dollars,” notes Crypto Globalist.
Coupled with the fact that interest rates are on the rise in Europe and the U.S., with systemic risks in Europe, the catalyst for cryptocurrency are present. There’s also a risk that global currencies could face heavy declines given unsustainable debt levels.