The sharp depreciation of the Turkish lira increased the demand for “Tether”

Tether

The local demand for Tether, a dollar-backed cryptocurrency in Turkey, increased in early May and remained high after the election.

While the value of cryptocurrencies declined in the global market, the demand for cryptocurrencies in Turkey continued to rise due to the depreciation of the Turkish lira. Last week, the Turkish lira reached historic lows and depreciated by 11% against the dollar, with the USD/TRY exchange rate closing the week at 23.41.

Investors turned to alternative channels The sharp depreciation of the Turkish lira led investors to seek alternative channels. According to data from Kaiko reported by Bloomberg, transactions in the crypto market with the lira accounted for 10% of the total cryptocurrency trading volume in early June. This figure was at 4% at the beginning of 2023. The global daily cryptocurrency trading volume exceeds $1 trillion.

Furthermore, according to CoinMarketCap data, Tether’s share of trading volume on BTCTurk, a Turkey-based exchange, is 20% compared to 1% on Binance. This indicates that the demand for stablecoins remains strong in the Turkish markets.

‘Making foreign exchange and gold purchases with the lira has become difficult’ Speaking to Bloomberg, former banker and lecturer Ebru Güven stated that regulatory measures on foreign exchange trading have made it difficult to purchase dollars or gold with the lira.

Güven said, “Investing in stablecoins allows people to preserve the value of their wealth, and it is seen as one of the ways to protect assets when inflation is this high. This is currently the sole motivation for people to buy stablecoins.”

Tether

Tether (USDT) is a cryptocurrency that is pegged to the value of 1 United States Dollar (USD). It is considered a stablecoin because its value is generally paired with a fiat currency, which is the dollar, providing a stable value and protection against volatility.

Tether is created by Tether Limited, a centralized payment system. In this system, Tether Limited holds an equivalent amount of dollars in reserve for each USDT token issued. This reserve allows users to redeem their Tether tokens if desired.

Tether can serve as a bridge for trading with other cryptocurrencies on crypto exchanges. In many cryptocurrency exchanges, Tether can be used as a substitute for the dollar, enabling users to quickly transfer value between different cryptocurrencies. Additionally, users can use Tether as a safe haven to shield themselves from price fluctuations in the cryptocurrency markets.

However, Tether has been surrounded by controversy. Doubts have arisen regarding whether Tether truly has the dollar reserves for each token, lack of transparency, and inadequate regulatory oversight.

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