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Bitcoin And Turkey: A Good Match Or A Perfect Storm?
JOHN TASKINSOY
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Abstract
There was only Bitcoin in January 2009, but now over 3,000 altcoins are traded; as of October 25, the combined market cap of 3,047 cryptocurrencies is $248 billion. Bitcoin (at $ 9,285.89) with a market cap of $170 billion still dominates 68.4% of the cryptocurrency market. Both market cap figures are significantly below their peaks on December 17, 2017; $830 billion and $321 billion respectively. The adoption of Bitcoin in Turkey has seen its fastest rise since 2016 on account of the failed coup attempt by a fraction of the Turkish military, the conviction and sentencing of the U.S. Pastor Andrew Brunson of terror-related charges, rising geopolitical risks on account of the strained US-Turkey relations, and Turkey’s ongoing military operations along its borders and into Syria. The confluence of domestic and external factors have been a major catalyst in prompting pockets of people in Turkey to flock to Bitcoin as a safe-haven asset. Cryptocurrencies are known for their extreme volatility, but the Turkish lira’s plunge in August 2018 made even most erratic volatilities of cryptocurrencies seem calmer. Bitcoin investors/enthusiasts must keep in mind that the price of Bitcoin has witnessed a total of 16 price corrections (50% or more) in 7 years, and 8 of these have occurred in the last two years. Another substantial price correction, similar to that of December 2017-18 (i.e. price plummeted from almost $20,000 to $3,236), would result in a severe financial catastrophe for Turkish Bitcoin holders.
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