Turkish nationals have flocked to Bitcoin as a last resort following the growing inflation rate in the country. The country’s consumer price index (CPI) has increased by 78.62% annually, marking a high that was last seen over two decades ago.
The inflation rate only grew by 12.62% in 2020 despite COVID-19
The Turkish government revealed the alarming data in a tweet via its official handle. Embedded in the tweet is an official report on the government’s website showing a detailed analysis of the country’s growing inflation crisis. In addition to the CPI increasing by 78% since June last year, a monthly increase of 4.95% was also recorded.
For context, the inflation rate in the country two years ago only increased by 12.62% despite the damaging effects of the COVID-19 pandemic on world economies. A year later, inflation grew by 17.53% in June of 2021.
The rapid growth this year is likely influenced by several factors. These scary data, which affect the everyday lives of the average Turk, have forced a good portion of the population to turn to BTC trading as trading volume rises by 40%.
The energy cost has been on the high side of late, especially in Turkey, which has significantly affected the country’s financial sector. Additionally, the Turkish lira appears to be underperforming. The lira has plummeted by 21% against the dollar this year after falling by 44% last year.
Bitcoin P2P trading volume in Turkey has increased significantly
Conversely, Bitcoin P2P trading volume in Turkey has increased significantly, especially on Helsinki-based P2P Bitcoin exchange platform LocalBitcoins. Most Turks exposed to the world of digital assets have chosen to seek solace in digital gold.
Per data from LocalBitcoins, the first and second quarters of 2022 have seen a massive increase in the trading volume within Turkey, the biggest surge recorded sometime in March. There was a 51% increase in Q1 2022 from the trading volume in Q4 2021. Q2 2022 also saw an increase of 40% from the volume in Q1 2022.
While other countries resort to interest rate hikes to combat growing inflation, Turkish president Recep Tayyip Erdoğan has expressed his animosity towards this measure. The Turkish government, however, has turned to gold savings as a hedge against inflation. In February of this year, the government revealed a scheme to integrate gold savings into the conventional banking system.
The Turkish government frowns at crypto trading activities, but that has scarcely discouraged Turkish nationals from seeking refuge in Bitcoin in these troubling financial times.