At the end of last week, Turkey’s central bank raised interest rates by 200 basis points in a larger than expected move as part of an effort to tame inflation and to defend the sliding Turkish Lira. The move, while painful, was widely applauded across global markets. Central bank governor Naci Agbal was praised for making the difficult but necessary move despite political pressure. The Lira rebounded amidst a surge in global confidence that Agbal was focused on the deteriorating inflation environment and was not afraid to make tough decisions in order to stabilize the currency.

It didn’t last long. Over the weekend President Erdogan unceremoniously sacked Agbal. For a strong man leader, it seems the idea of having a central banker willing to make decisions independent of political influence was unacceptable. The confidence that the difficult rate hike inspired just days earlier evaporated, sending the Lira into a tailspin. As capital flees Turkey, fearful of the turmoil and instability that Erdogan is inviting, global markets have traded choppy as they have opened after the weekend.

While it is clear that capital is fleeing Turkey and the Turkish Lira this morning, it is unclear as of yet what effect this has on global risk assets and on BTC and other crypto. In some ways, turmoil in fiat markets and political interference in central banks should be a net positive for BTC. In other ways, this same action could be a positive for reserve currencies like the dollar or Euro, and they could also be negative for risk assets, which could be a negative, at least in the short term, for BTC.

Overnight, Asian and European equity markets, along with crypto markets, traded choppy and sideways, not quite ready to take a stand and pick a direction to start the week with. It appears to me that, much like my uncertainty as to whether the weekend developments should drive prices higher or lower, the whole market is in “wait and see” mode. As of this writing, US equity markets will open in a few minutes. I think that global traders are watching and waiting to see what the US markets will do, and unless the US takes directional leadership, we’ll continue to see range bound chop from traders who can’t decide whether the weekend has left us in a better or worse place.

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