The trading pair of USDT/TRY on Binance experienced its most significant volatility since April 2024 following the arrest of Istanbul Mayor Ekrem İmamoğlu, a prominent opponent of President Tayyip Erdogan.
The detainment of İmamoğlu, a crucial political figure and prospective presidential candidate for 2028, sent shockwaves across Turkey’s financial markets, resulting in a sharp decline of the lira and an influx of interest in cryptocurrencies.
As the news circulated, the lira swiftly plummeted, reaching a record low in one of its most dramatic intraday declines in history. The USDT/TRY pair on Binance also experienced extreme fluctuations, surging 6.4% in volatility, marking what is seemingly the highest volatility level since April 2024.
Two of Turkey’s largest cryptocurrency exchanges, BtcTurk and Paribu, witnessed a surge in trading volumes, increasing by 23.4% and 18.8%, respectively, as many traders rushed to protect their assets amid the lira’s volatility—a trend reminiscent of past economic turmoil in Turkey.
Meanwhile, Borsa Istanbul, Turkey’s only stock exchange, took a significant hit. The BIST 100 index fell nearly 6%, marking its worst day since 2023, while the banking sub-index dropped almost 10%, leading to a temporary halt in trading.
Authorities intervene to prop up the lira
In response to the rapid fall of the lira, Turkish authorities took action in the foreign exchange market. Financial sources suggest that the central bank may have offloaded between $5 billion and $10 billion in foreign exchange reserves in an effort to stabilize the currency. While such measures may ease short-term volatility, concerns linger regarding the sustainability of Turkey’s foreign reserves.
On March 19, authorities arrested İmamoğlu on allegations related to terrorism, a move characterized by the opposition Republican People’s Party as a “coup attempt.” His potential candidacy for the upcoming presidential election in 2028 makes the implications of his arrest particularly significant.
Reports indicate that warrants have been issued for İmamoğlu and around 100 others, including a close aide. Authorities also restricted access to several roads in Istanbul and imposed a four-day protest ban, seemingly to discourage unrest.
An official from a human rights organization described the arrest as a “blatant misuse of the justice system,” suggesting it is part of a broader pattern of politically motivated actions aimed at undermining the opposition.
Social media platforms affected
Following the arrest, users throughout Turkey reportedly faced significant access issues on major social media platforms, including X, Instagram, YouTube, and TikTok.
Shortly after the news broke, the lira fell sharply, achieving a record low of 42 to the U.S. dollar, reflecting an astounding 12.7% decline.
International responses to İmamoğlu’s detention were swift. The German government reportedly labeled the action as a “serious setback for democracy” in Turkey. A spokesperson emphasized that the arrest forms part of a broader trend of increasing legal pressure on İmamoğlu.
Recently, the central bank had begun taking steps toward conventional monetary policies, which were seen as a means to stabilize the economy and attract foreign investment. However, with the current political instability, there are growing fears that these efforts could falter, making it more challenging to lure the foreign capital essential for Turkey’s economic recovery.