Turkey: Financial Crisis Drives Demand for Bitcoin and Gold

The financial crisis in Turkey is worsening, with the lira hitting a historic low of 48.8 lira to 1 dollar, representing a nearly 18% loss over the past year. The BIST 100 has dropped by about 9% in three sessions, leading to a suspension of trading. The Turkish regulator has ordered the liquidation of 131 investment funds, representing approximately 18 billion dollars in assets. Despite a key interest rate of 37%, inflation exceeds 30%, prompting households to protect their purchasing power. Gold, traditionally seen as a safe haven, has seen purchases of bars and coins reach a record 4 billion dollars in the first quarter. Turkish households hold over 750 billion dollars in gold, representing a significant portion of their wealth. Cryptocurrencies, although riskier, are gaining popularity, with between a quarter and half of Turkish households owning crypto assets, according to the IMF. This adoption is linked to inflation and the depreciation of the lira. Bitcoin, while less stable than gold, is sought after, while stablecoins are used to gain exposure to the dollar. In the face of the lira's erosion and market turbulence, Turkish savers are looking to transfer their wealth to assets outside the national monetary system.

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