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Binance Research: Decrypting the Turkish Crypto Market, Crypto Boom Amid Economic Difficulties

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40% of residents in Türkiye hold currency, and 70% of residents are optimistic about the future development of cryptocurrency

Source: Binance Research

Editor's note: This article analyzes the current state of the cryptocurrency market in Istanbul, Turkey. The acceptance of cryptocurrency in Turkey is no less than that in the United States and South Korea. In addition to fiat currency, cryptocurrency has become the second most popular choice for local people to invest in, and its priority even exceeds that of traditional investment categories. In terms of market expectations, 70% of respondents are optimistic about the development of cryptocurrency in the next 1-5 years.

Choosing encrypted assets is, of course, for the pursuit of its returns and growth, but not for gambling everything. On November 9th, Binance released its latest Web3 wallet product at the Blockchain Week held in Istanbul, Turkey.

Wallet, the entrance to the world of encryption. While everyone's attention is focused on the fierce competition among industry giants for the entrance, we seem to have forgotten that the stage of this conference itself is also an entrance: Istanbul, Turkey.

Standing at the crossroads of the Eurasian continent, Turkey is a country that naturally experiences the collision of Eastern and Western cultures in the course of its historical development. And today, as the influence of Crypto gradually expands, Turkey has already set foot in the fertile land of the crypto world.

Along with Blockchain Week, Binance Research released a research report on the current state of the cryptocurrency market in Turkey, which shows that 40% of citizens hold cryptocurrency investment exposure and 73% of Turkish respondents believe that the number of cryptocurrency investors will continue to increase in the next 5 years.

It seems that Turkey's journey into crypto combines different characteristics of both the East and the West, neither resembling the asset frenzy Fomo of Southeast Asian countries nor the cautious policies towards crypto of European countries.

Leading Cryptocurrency Acceptance

When it comes to the acceptance of encryption, most people immediately think of China's mining industry in the past, as well as the current financial exploration in the United States and the speculative frenzy in South Korea.

However, in reality, the level of acceptance of cryptocurrencies among Turkish citizens is not at all behind these countries.

According to a report by Binance, 2 out of every 5 Turkish residents own cryptocurrency, with a surge in local crypto adoption from 16% to 40% over the past 3 years.

Using the same encryption acceptance index standards for evaluation, Turkey can also rank 12th globally; considering its position in the world's geopolitical economy and its relatively small size compared to other economies, Turkey's level of encryption acceptance is indeed somewhat "far ahead".

In addition, a little-known fact is that Turkey is the fourth largest cryptocurrency trading market in the world, with significantly higher trading volume of cryptocurrency assets than several other major economies in the world. Binance's internal trading data also shows that in early September of this year, the Turkish lira (local fiat currency) once ranked first among all fiat currency trading pairs on the exchange, accounting for an astonishing 75% of the total.

Choice in the Midst of Internal and External Troubles

Why does Turkey have such a high level of acceptance of encryption?

The choice of the market is closely related to the economic environment. Turkey has been experiencing economic hardships and downturns in the past 5 years.

In the summer of 2018, Turkey faced an economic crisis with rapid depreciation of the lira. The causes of this crisis include rising inflation, external debt issues, increasing trade deficits, and investor concerns about Turkey's economic policies.

In August of the same year, the Turkish legal currency, the lira, experienced a sharp depreciation, reaching a historic low at one point. For a period of time, the exchange rate of lira to US dollars exceeded 7 lira per 1 US dollar.

Along with currency depreciation, there is also a surge in exchange rates, an increase in unemployment rates, and intensified inflation. This has further raised concerns about the stability of the Turkish economy.

Later, the Turkish government implemented some monetary policy adjustments, including interest rate hikes, to cope with the devaluation of the lira. After these policy adjustments, the exchange rate of the lira has rebounded somewhat, but still remains at a relatively low level.

In 2020, the global COVID-19 pandemic also had a negative impact on the Turkish economy, and the lira further plummeted in a free fall.

More importantly, after experiencing economic struggles, capital with keen market sense will inevitably seek refuge and pursue higher returns in contrast to the strong upward trend of the domestic economy and subsequent cryptocurrency bull market cycle. Therefore, Turkey's entry into the world of cryptocurrency is also an inevitable choice under the interaction of the macroeconomic environment and industry cycle.

Meanwhile, due to its location at the junction of the Eurasian continental plates, Turkey is also deeply affected by crustal movements and experiences frequent earthquakes. After an earthquake, the affected areas may have difficulty accessing funds through the banking system due to infrastructure damage. Cryptocurrencies can provide low-cost and frictionless funding support for post-disaster reconstruction efforts.

With appropriate promotion, local users' favor towards encryption may take another step forward.

When Cryptocurrencies Become a Mature Choice

If cryptocurrencies are popular in Turkey, what are the specific investment situations of users?

Binance's report shows that cryptocurrencies are gradually becoming the mainstream choice among local investment categories.

除了法币里拉所产生的利息收益外，加密资产成为了当地人最受欢迎的第 2 种选择，甚至其选择优先级超过了传统的投资品类，如债券、股票和贵金属等。

Translation:

Aside from the interest generated by fiat lira, cryptocurrency has become the second most popular choice among locals, with its priority even surpassing traditional investment categories such as bonds, stocks, and precious metals.

And in terms of user habits, more than 70% of cryptocurrency investors check their accounts once a day, with over 30% of them trading once a week. This behavior is consistent with our own understanding that in the world of cryptocurrency, a day is like a year and users from different parts of the world, such as Turkey on the other side of mainland China, exhibit similar habits.

However, data shows that local users are not entirely fanatical "all-in disciples" and Degens.

Regarding the distribution of funds, the majority of users invest an amount of 5,000 lira or less in cryptocurrency, compared to over 1 million lira invested in real estate and around 25,000 lira invested in traditional bonds.