- Over half of Turkish adults now invest in cryptocurrencies.
- Crypto emerged as a haven against double-digit inflation in countries like Turkey and Venezuela.
- Historical inflation trends suggest potential boosts in global crypto adoption during economic downturns.
Amidst the backdrop of global economic uncertainties, Turkey’s soaring inflation has led to an unexpected financial pivot: a massive surge in cryptocurrency adoption. A recent report shows that over half of Turkish adults own crypto. As traditional currencies waver, is the world on the brink of a broader crypto revolution?
Turkey’s Rapid Crypto Adoption Amidst Economic Crisis
On Friday, September 1, crypto exchange KuCoin released a report highlighting Turkey’s growing trend of crypto investments. The study revealed that the percentage of crypto investors in Turkey aged 18 to 60 surged from 40% in November 2021 to 52% by May 2023. According to the data, most (71%) invested in Bitcoin.
This shift, notably amidst the Turkish lira losing over 50% of its value against the US dollar, underscores the popularity of digital assets in countries facing economic strife.
The report also highlights that, in dire circumstances, crypto can reach a wider audience. In Turkey, the gender crypto ownership gap is closing, especially among younger age groups. Notably, 47% of crypto investors between 18 and 30 in Turkey are female.
Turkey isn’t the only country turning to cryptocurrencies amidst economic challenges. Argentina, grappling with its own set of inflationary pressures, has seen a rise in crypto adoption.
From Venezuela to Argentina: Crypto as a Safe Haven
The surge in cryptocurrency adoption isn’t unique to Turkey. Across the globe, especially in emerging markets, cryptocurrencies are increasingly being viewed as a viable hedge against inflation and currency devaluation.
The peso has faced significant devaluation in Argentina, pushing many towards digital assets. According to a Reuters report, Argentina had a crypto ownership rate of 23.5%, driven largely by the country’s economic challenges and the search for more stable financial solutions.
Venezuela offers another stark example. For years, the country has grappled with hyperinflation, leading to the bolivar’s drastic devaluation. As a result, many Venezuelans have turned to cryptocurrencies, not just as an investment but as a means of everyday transactions and preserving their wealth.
With Rampant Inflation, Will US Turn to Crypto?
These examples raise a natural question: Is such a scenario possible in the US? While the country’s financial system is relatively stable, it wasn’t always so. Notably, the period around the 80s has seen significant inflation, peaking at 13.55% annually.
These figures show that the US is not immune to double-digit inflation. Even recently, the economy saw an inflation scare, with the rate of inflation peaking at 8% in December 2022. In the case of a prolonged surge in inflation in the future, Americans and people in other major economies will likely turn to crypto.
On the Flipside
- Traditionally, gold has been the go-to asset for many investors seeking a hedge against inflation. However, since the rise of cryptocurrencies, gold’s performance has been less than stellar.
- Turkey’s approach to combatting inflation has been described by many as unorthodox. Instead of tightening monetary policy to curb inflation, Turkey has opted to drop interest rates, with predictable results.
Why This Matters
The increasing adoption of Bitcoin in countries facing significant economic challenges boosts its credibility as a hedge against inflation.
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