Brazilian firms pile into stablecoins and bitcoin as Lula election win hits the real
Corporate clients drove 78% of Sunday trading at Mercado Bitcoin as USDT turnover jumped nearly 800% around Brazil's runoff. The real then fell sharply and the Ibovespa dropped 14% the next day.
GamblingCryptoSource: CoinDesk
Brazilian companies rushed into crypto on Sunday to shield their treasuries from the runoff result, according to Mercado Bitcoin. Incumbent President Luiz Inácio Lula da Silva unexpectedly defeated Flávio Bolsonaro. Corporate accounts generated 78% of the exchange's trading that day, while retail customers accounted for 22%.
Turnover in Tether's USDT stablecoin rose nearly 800% from the previous week and was more than triple the average of the four prior Sundays. Bitcoin trading climbed 865% against the previous Sunday. Mercado Bitcoin research analyst Pedro Fontes said stablecoins such as USDT and USDC offer a simple way to dollarize part of one's assets at any time and from small amounts.
Concerns about public finances had weighed on the real. Lula's platform of higher social spending, together with a ban on online betting that would cut tax income, raised worries about the fiscal outlook. Rising debt, new spending commitments and limited room for tax increases would complicate efforts to fix the budget.
The fears materialized the next day, when the Ibovespa index fell 14%, its worst performance since March 2020, and the dollar gained more than 8% against the real, its biggest daily rise since 1999. Three weeks earlier, after Bolsonaro led the first round, the Ibovespa had risen 7.7% and the dollar had weakened more than 4%.
The activity was not limited to one venue. Biscoint, which tracks prices and volumes across 10 platforms including Binance and Mercado Bitcoin, reported that 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, or about $350 million, up 65% on the previous week, while bitcoin trading rose more than ninefold to 1,336 BTC. Bitcoin gained 9.4% against the real but slipped 0.2% against USDT, consistent with a repricing of the Brazilian currency.
Prediction markets also featured. On Oct. 24, Kalshi put Bolsonaro's chances of winning at 84%, even though its own article described polls as showing a very close race. Kalshi and Polymarket have both been blocked in Brazil since April. Einar Knobel, CEO of TxODDS, said he would not read the outcome as a failure of prediction markets, arguing that the mechanism did what it is designed to do with the information it was given.
Based on reporting by CoinDesk.