On Sunday, Bitcoin hit the all-time high against the Turkish lira (TRY). It has to do with the recent Bitcoin rally and the declining Turkish fiat currency, which fell to a record low against the euro.
Cryptocurrency bulls are waiting for Bitcoin to update its all-time high, but everyone is using the US dollar as a reference, given its status of a world reserve currency. However, what about other national currencies? In Turkey, the cryptocurrency is already the most expensive in history when traded against the lira.
On Sunday, one Bitcoin bought over 83,670 liras, which is a record. Meanwhile, one US dollar bought 6.98 liras.
At the end of 2017, when the cryptocurrency hit its ATH against the greenback, BTC traded at over 76,000 liras. As for the USD/TRY pair, it traded at around 3.75 back then.
The Turkish currency has gradually declined since then, with the downtrend accelerating in 2018. The lira has lost value amid political tensions inside the country, which is led by President Recep Tayyip Erdogan. In 2018, along with the plummeting value of the lira, Turkey experienced rising inflation and borrowing costs, which resulted in loan defaults as part of an economic crisis.
At the end of last week, the lira fell to a record low in pair with the euro. Investors are worried about declining foreign exchange reserves, potential sanctions from the European Union, and growing foreign-denominated debt. It’s worth mentioning that the euro itself has been increasing against majors, including the USD.
In a desperate move, Turkey boosted the lira’s borrowing costs to as high as 1,000% in offshore markets to make it almost impossible to short it. This allowed the Turkish currency to recover some losses on Tuesday.
The Wall Street Journal, which cited analysts and traders familiar with the matter, reported:
“The interest rate attached to so-called swap transactions, which allow one party to obtain lira for a short period in exchange for dollars, reached 1,000% in annualized terms on offshore markets.”
Besides the declining lira, Bitcoin itself has demonstrated an impressive rally at the end of July, after two months of slumber. The cryptocurrency is leveraging its safe-haven status as investors are cautious with the US dollar and risk-oriented currencies.
For Turkish citizens, Bitcoin can be even more valuable as it’s a great refuge against the declining national currency.
