Turkish Lira Acutely Nosedives, Putting Bitcoin Into Perspective Once More
The Turkish lira’s value collapsed by double-digit percentage points today, August 10th, as a sell-off came on the heels of a widening U.S.-Turkey diplomatic spat and growing domestic concerns over Turkish President Tayyip Erdogan’s handling of fiscal policy. The currency crisis has created considerable buzz in the cryptoverse, where bitcoin may be volatile, but never because of the ideological actions of singular political administrations.
Subscribe to the Bitsonline YouTube channel for great videos featuring industry insiders & experts
Currency Chaos Hits Turkey
The Turkish lira (TRY) has nosedived around 16 percent today as President Erdogan’s worsening tensions with U.S. President Donald Trump’s administration have seemingly catalyzed into an acute currency crisis.
— Erik Voorhees (@ErikVoorhees) August 10, 2018
It’s the risk of centralization, so to speak.
Tensions flared-up last week after President Trump slapped sanctions on two Turkish government officials over Turkey’s refusal to release Andrew Brunson, an American pastor imprisoned in the nation. Amid today’s collapse of the USD/TRY exchange rate, President Trump launched the next salvo in the dispute, announcing a biting new round of metal tariffs against Turkey.
I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!
— Donald J. Trump (@realDonaldTrump) August 10, 2018
The resulting fallout has acutely intensified the lira’s recent downward slide, as the currency has now lost over 30 percent of its value since the start of 2018. In a fiery late-night speech to the Turkish public, President Erdogan appealed to the Turkish people to exchange their assets and foreign currencies for lira.
“This will be my people’s response to those who have waged an economic war against us,” Erdogan said.
From a purely market-based view, popular classical chartist Peter Brandt suggested the ongoing USD/TRY collapse was a lesson in “parabolic currency devaluation.”
— Peter Brandt (@PeterLBrandt) August 10, 2018
What We Talk About When We Talk About Money
Of course, bitcoin and the cryptoeconomy in general have had their own bearish performances in 2018, albeit BTC is still way up year over year.
Regardless, many in the cryptocurrency space, like ShapeShift CEO Erik Voorhees, will take their chances with volatile though ever-maturing decentralized currencies any day of the week.
How many more sovereign currencies will Bitcoin outlast?
— nic carter (@nic__carter) August 10, 2018
It’s one thing to see BTC volatility as its forex-like markets naturally respond to developments. It’s another thing to see your life savings and your spending power evaporate in a matter of hours because of a trade dispute between temporary administrations.
So it’s not necessarily that bitcoin has all the answers, but rather that it doesn’t have a centralized chokepoint of this kind. And that’s worth deeply considering as the Turkish people’s livelihoods are now being painfully squeezed over what many are hailing as a battle of the wills between Erdogan and Trump.
Accordingly, the lira’s crisis marks only the latest fiat currency that’s brought to bear the idea of bitcoin being the foil for old money. From the hyperinflation of the Venezuelan bolivar to the current political collapse of the lira, bitcoin is looking more and more like a means to transcend the now seemingly archaic fiat model. Indeed, even the International Monetary Fund may be coming around to that view.
"Crypto assets may one day reduce demand for central bank money."
– IMF https://t.co/qpWHcpjwr3
— Dan Hedl (@danheld) August 9, 2018
What’s your take? What do you think the lira’s acute collapse suggests in relation to crypto? Sound off in the comments below.
Images via Reuters, Financial Times, Pixabay