Bitcoin is currently trading around $11,000 on the USD market, still about 75% off from hitting the 2017 peak of $20,000.
The world’s largest cryptocurrency might still have a way to go before it could see new highs, but in Turkey, the prices have flown upwards.
“Bitcoin's all-time high is already here, it's just not evenly distributed,” said Casa co-founder and CT Jameson Lopp in response to investor Preston Pysh’s tweet, “Bitcoin already making new ATH in Turkey.”
This new high has been achieved because of the TRY depreciation despite the state banks selling at least $2.5 billion to prop up the lira. Turkey’s gross currency reserves have dropped about 40% since this year’s beginning. Analysts at MUFG Bank said it would continue at least until inflation is stabilized.
“With the aggressive push for credit into the real economy, investors are also anticipating a deterioration in Turkey’s current account position. Turkey’s current account position turning to the deficit with one of the largest negative real yields is a recipe for currency depreciation.”
Even though the US dollar has been declining, reiterating to a two-year low, the lira continues to weaken.
Once a favorite of emerging-market investors, the cost of borrowing Turkish lira for a short period in an exchange of dollars climbed over 1,000% on offshore markets, the highest level since March 2019. This was because of the heavy intervention late last week, which drained the supply of local currency.
To deter short-sellers, foreign investors are prohibited from borrowing from local banks, as such, those without the currency have to borrow it on the offshore market where the limited supply drives the rate.
Turkish authorities have been leaning on state banks to bolster the lira with dollar sales instead of rising rates or curving the credit supply.
All of this has the lira being one for the worst performers in the emerging markets. Apart from the Argentine peso, the Turkish lira is the only primary emerging-market currency that has fallen since the dollar peaked in March.
The same is the case for the Argentine peso. Currency debasement has people spending 336,980 ARS in December 2017 to buy one Bitcoin, which has now risen above 800k ARS.
Although it is more of a case for fiat currencies, the currency crisis is making bitcoin slowly a choice of preference to the people of these countries. For instance, Bitcoin trading volume has been continuously hitting new highs in Argentina on peer-to-peer exchanges.
In the week ending on August 2nd, Argentina hit a new high of $1 million, doubling in just a month, on LocalBitcoin and Paxful combined, as per UsefulTulips.