Brazilian firms fled the real for stablecoins as election shock hit markets
Brazilian companies moved their treasuries into dollar-pegged stablecoins on election day, and the next day's market rout showed why. Corporate accounts generated 78% of trading on crypto exchange Mercado Bitcoin on Sunday, with turnover in Tether's USDT jumping nearly 800% from the week before and more than triple the average of the four preceding Sundays, the exchange said. Bitcoin trading rose 865% against the previous Sunday.
The trigger was the result. Incumbent president Luiz Inácio Lula da Silva unexpectedly beat Flávio Bolsonaro, and Lula's platform of higher social spending and a ban on online betting that would cut tax income raised concerns about the country's finances, adding pressure on the real. "For investors, this reinforces the logic of not relying only on the real," Pedro Fontes, a research analyst at Mercado Bitcoin, wrote in an analysis. In a scenario of higher exchange-rate pressure, he said, stablecoins such as USDT and USDC are "a simple way to dollarize part of your assets, at any time and starting from low amounts."
The concern materialised on Monday. The benchmark Ibovespa stock index fell 14%, its worst performance since March 2020, and the dollar jumped more than 8% against the real, its largest daily gain since 1999. Three weeks earlier, when Bolsonaro finished ahead in the first round, the index rose 7.7% and the dollar weakened more than 4%.
The burst of real-denominated trading went beyond one venue. Data from Biscoint, which tracks prices and volume across 10 venues including Binance and Mercado Bitcoin, shows USDT turnover against the real rose 150% from the previous Sunday and USDC volume jumped 318%. On Monday, combined USDT and USDC turnover reached 1.84 billion reais ($350 million), 65% higher than the previous week, while bitcoin trading rose more than ninefold to 1,336 BTC. The increases came as volumes fell elsewhere: on Binance, bitcoin turnover against the real rose 370% while the global BTC/USDT pair recorded a 25% decline.
Prediction markets had pointed the other way. Kalshi put Bolsonaro's chances of winning at 84% in an October 24 preview, even as its own article described polling as showing an exceedingly close race. Both Kalshi and Polymarket have been blocked in Brazil since April. "I would not read this as a failure of prediction markets," Einar Knobel, chief executive of sports data and technology company TxODDS, told Token Times. "The mechanism did what it is designed to do with the information it was given."
