Tether, SHIB Compete With Bitcoin in Inflation-Ridden Turkey as Lira Tumbles

Bitcoin’s perceived role as an inflation hedge is competing with altcoin speculation and U.S. dollar exposure through tether.

AccessTimeIconDec 10, 2021 at 9:16 a.m. UTC
Updated May 11, 2023 at 6:44 p.m. UTC
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Turkish citizens, facing high inflation and a plunging currency, are shunning the example set by some foreign public companies that have adopted bitcoin as a store-of-value asset. Instead, they’re flocking to alternative cryptocurrencies like shiba inu (SHIB) and the stablecoin tether (USDT).

Trading volume in the bitcoin-Turkish lira currency pair on crypto exchange Binance totaled $918 million in November, less than a fifth the level of the shiba inu-lira value of $5.26 billion and tether-lira’s $5.58 billion.

“The data shows despite the instability faced by the lira, local traders are still attracted to the exceptional returns associated with coins such as SHIB,” Strahinja Savic, head of data and analytics at Toronto-based crypto platform FRNT Financial, said in an email.

CoinDesk reached out to BTCTurk, one of a handful of local exchanges offering lira-BTC trades for comment, but has not received a response.

In November, the lira crashed nearly 40% against the dollar after the central bank cut interest rates even as inflation topped 20% and the U.S. Federal Reserve began tapering its liquidity-boosting, asset-purchase program. The currency has depreciated 87% this year and is on track to register its ninth straight annual drop.

“The official inflation figure is 21%, but at the ground level, it is more like 50%,” Sabri Aygun, a textile professional and crypto investor from Istanbul, told CoinDesk in a WhatsApp chat.

Demand for almost everything priced in the local currency, including gold, picks up in such situations.

“Turkish citizens’ priority is gold and dollar,” Aygun said. “They also buy cheap crypto coins like SHIB, VET, XRP because BTC is expensive.”

SHIB, with its massive supply of 1 quadrillion tokens, is exceptionally cheap compared with major coins. SHIB/TRY was trading near 0.00049 liras on Binance at press time while BTC/TRY was changing hands at 686,580 liras.

While crypto payments are banned in Turkey, owning crypto is legal. However, the growing popularity of tether and other cryptocurrencies may draw regulatory ire, as increased capital flight through these non-banking channels could add to the lira’s pain.

The attraction of cheap altcoins isn’t limited to Turkey. Retail investors in India and elsewhere are looking to SHIB and other smaller coins as leverage plays on bitcoin. Shiba inu, the self-proclaimed dogecoin killer, has rallied nearly 380% in dollar terms this quarter. Meanwhile, bitcoin has gained just 8%, according to TradingView.

Tether-Turkish lira volume spiked in November
Tether-Turkish lira volume spiked in November

According to FRNT’s Savic, traders in Turkey could be using tether as a proxy for dollar exposure. Tether, the world’s largest stablecoin by market value, is supposedly backed by a basket of reserves and holds a 1:1 peg to the dollar. It’s widely considered a digital representation of the dollar that can be moved freely across exchanges and national borders, bypassing traditional banking channels.

“I hold USDT because sending USDT is fast and cheap across different exchanges, also swapping between spot and futures,” said Ercan Bozoglu, a crypto investor from Turkey who is based in the Netherlands. “Turks are mainly on cheap alternative cryptocurrencies, so they take profit at 2x and redraw (less fee cost).”

Aygun said the young generation is more interested in crypto than gold and USD, but is financially dependent on family, a fact confirmed by another local trader who said, “my father won’t let me buy crypto.”


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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.


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