FX168 (Hong Kong) - The cost of Bitcoin (BTC-USD) fell from a record high on Friday (April 16) following Turkey’s central bank’s decision not to allow crypto money to be used for spending.

The Central Bank of the Republic of Turkey (CBRT) has revealed that it will not allow the use of crypto money and other crypto assets based on spread-based book technology for expenditure, either outright or indirectly. The ban will take effect on 30 April 20194.

“No vendor will be able to carry out a trade model that applies crypto assets to either directly or indirectly supply no vendor and e-Money, and will not be able to supply any vendor related to such a trade model,” CBRT said in a statement.

According to the CBRT, the idea behind the ban is to cut the “interlocking” and “monitoring mechanisms” for crypto money and other similar digital assets.

Among other hazards, the central bank says crypto “may lead to irreparable losses for all parties to the business” because of the shortage. A statement from the bank added that the expenditure probably “contains elements that may undermine people’s belief in the skills and objects to which the current expenditure is being applied”.

Bitcoin fell more than 3% to $61,379 in early trading in London. Bitcoin fell below $61,000 per coin, down more than $2,500 from the day’s high.

Turkey’s need for crypto money has recently been boosted by inflationary pressures and a weakening Turkish lira. The country’s annual inflation rate crossed 16% in March. The disclosure follows a request from Turkish authorities last week for the business to supply user information.

Cryptocurrency fees have hit record highs in recent weeks as demand grows. Bitcoin, which has been bumping up and down in recent weeks, hit another record high on Wednesday, reaching $64,717.01.

Ethereum, the world’s second largest cryptocurrency, hit a record $2,488.07 on Thursday, culminating in a multi-month run. Ethereum fell nearly 2% on Friday. On Wednesday, cryptocurrency firm Coinbase became the first cryptocurrency company to list on the Nasdaq.

Coinbase, a very large crypto money business in the United States, was briefly valued at more than $100 billion when it debuted on Nasdaq on Wednesday. The stock closed its first day of trading at $328.28, down from its opening price of $381.

Why the abrupt revelation of the crypto money move?

Industry insiders point out that the central bank’s eagerness to move on crypto is probably still the result of the “storm” sparked by President Recep Tayyip Erdogan’s abrupt sackof central bank governor Naci Agbal in mid-March.

At that time, Turkey’s environmental trend suffered from the “triple killing of stock and debt exchange”, and the lira exchange rate plummeted more than 15% at one time…

In a very new ratesetting meeting on Thursday, Turkey’s new central bank governor, Sahap Kavcioglu, kept the central bank rate fixed at 19 percent, but did not repeat a promise last month that “monetary policy will be tightened further if necessary.”

That worries a growing number of insiders and the Turkish public that the lira may fall further and that the country’s hyperinflation may become more acute before it is stopped. As a result, there has been an upsurge in the conversion of the lira to crypto money in Turkey, which further increases the downward pressure on the lira.

According to Chainalysis, a blockchain analytics firm, cryptocurrency business in Turkey continues to surge after the former central bank governor was fired. From the beginning of February to the end of March, crypto money volume reached 218 billion lira, up from 7 billion lira in the same period in 2020. In this context, from March 20 to 24, when Agbal’s firing triggered environmental unrest in Turkey, the number of crypto money transactions in Turkey reached more than 23 billion lira in just a few days.

At the same time, web searches for the currency in Turkey also reached a very high level in March, according to Google Trends data. Searches for bitcoin spiked 566% in the hours after the lira plunged.

Away from the power of the government and central bank, Bitcoin has become an attractive hedge in Turkey.