People in Turkey are running to the crypto market as a haven against the collapsing lira currency.

Local demand for Tether, a dollar-backed stablecoin, surged in early May ahead of elections and has remained high since a win for President Recep Tayyip Erdogan rattled markets. While there’s been a global crackdown on the asset class and falling prices for the biggest tokens, the lira has fared even worse, breaching historic lows in recent days.

The Turkish currency has slid 11% against the dollar in the past week as the central bank has pulled back from intervention to prop it up after the vote. Since the previous election in 2018, the lira has lost 80% of its value as Erdogan pursued unorthodox economic policies, including attempts to tame inflation as high as 80% with interest-rate cuts.

In this environment, cryptoassets like stablecoins are perceived as increasingly attractive because these tokens are intended to maintain a consistent peg with the US dollar. Lira transactions accounted for 10% of total cryptocurrency trading volumes in the $1.1 trillion a day market in early June, after peaking at 18% in May, according to data from Kaiko. This compares with 4% at the start of 2023, the data provider said.

Ebru Güven, an Istanbul-based university lecturer and former banker, said regulations have made it difficult to buy dollars or gold with the lira. “Investing in stablecoins allows people to keep the value of their wealth, it’s one of the ways to hold on to some value when inflation is this high,” Güven said. “This is the only motivation for people to buy stablecoins right now.”

Turkish State Banks Resume Lira Defense After Record Drop

Tether’s share of trading volumes on BTCTurk, one of the largest Turkish crypto exchanges, stands at 20% compared with 1% on Binance, according to data from CoinMarketCap, signaling that demand for the stablecoin in Turkish markets is strong.

Batuhan Basoglu, a 28-year-old graphic designer, trades crypto on Binance and put all his savings into stablecoins and other cryptocurrencies.

“Just before the election, I felt the urge to convert my Turkish lira to US dollars due to the uncertainty surrounding the currency’s future. To safeguard myself against this risk, I purchased Tether,” Basoglu said.

Erdogan’s Wall Street Team Gets Icy Reception in Foreign Markets

And as the lira slipped further, instead of converting those Tether tokens back to lira, Basoglu went all in on the stablecoin.

“It’s noticeable that despite historically low volumes, demand for stablecoins on Turkish markets has remained robust,” Dessislava Aubert, an analyst at Kaiko, said in an email. Tether’s share of trading volumes on local markets reached its highest level since 2020 in May, Aubert said.