USDT/TRY pair surges on Binance after Erdogan's political opponent is arrested
Binance's USDT/TRY trading pair has seen its biggest swing since April 2024, following the arrest of Istanbul Mayor Ekrem İmamoğlu, a major political opponent of President Tayyip Erdogan.
The arrest of İmamoğlu, a prominent political figure and potential candidate for the 2028 presidential election, in Turkey has sent financial markets into turmoil, putting pressure on the lira and boosting demand for cryptocurrencies.
Soon after news of the arrest broke, the Turkish lira went into free fall, hitting a new record low in an unprecedented trading day. The USDT/TRY pair on Binance has seen a major price surge, with a 6.4% increase, marking the strongest move since April 2024.
Major Turkish cryptocurrency exchanges such as BtcTurk and Paribu have also seen a sharp increase in trading activity, with daily trading volumes up 23.4% and 18.8% respectively, according to CoinGecko. This suggests that investors are flocking to cryptocurrencies as a hedge against the falling value of the lira, which is common during periods of economic turmoil in Türkiye.
Türkiye's Stock Market and Central Bank Coping with Volatility
Türkiye's main stock index, the BIST 100, fell nearly 6%, its biggest drop since 2023, while the banking sub-index fell nearly 10%, forcing a trading halt on the stock market.
In response to the lira's sudden depreciation, the Turkish Central Bank intervened heavily in the foreign exchange market. It is estimated that the central bank sold between $5 billion and $10 billion from its foreign exchange reserves in an attempt to shore up the lira. However, these actions have raised concerns about the long-term sustainability of Türkiye's foreign exchange reserves.
İmamoğlu's arrest sparks political uproar
On Wednesday morning, March 19, Türkiye arrested İmamoğlu on terrorism-related charges, a charge the opposition Republican People's Party (CHP) called "a political coup." İmamoğlu is poised to become the party's presidential candidate in the 2028 election, making the arrest all the more significant.
According to Anadolu, about 100 others were also arrested along with İmamoğlu, including his close aides. Authorities also blocked several streets in Istanbul and imposed a four-day ban on protests in an attempt to prevent protests.
International Reaction and Social Media Incident
The arrest quickly drew international condemnation. The German government called the arrest a “serious setback for Turkish democracy” and criticized the arrest as part of a “pattern of using the law to suppress political opposition,” according to the German Foreign Ministry.
Following the arrest, users across Turkey experienced problems accessing major social media platforms such as X, Instagram, YouTube and TikTok. Internet monitoring organization NetBlocks confirmed that Türkiye had imposed restrictions on access to these platforms.
Shortly after the arrest was announced, the lira fell to a new record low of 42 lira per US dollar, down 12.7%, marking its biggest one-day drop ever.
Türkiye’s Economic Future Faces Difficulties
While the Turkish Central Bank has recently adopted more conventional monetary policies to stabilize the economy and attract foreign investment, the current political turmoil could disrupt these efforts. Attracting foreign capital, essential to Turkey’s economic recovery, is becoming increasingly difficult amid growing political uncertainty.
