Brazilian companies rushed into stablecoins on election day to protect their treasuries from the fallout of an election that saw incumbent President Luiz Inácio Lula da Silva unexpectedly defeat challenger Flávio Bolsonaro. Corporate accounts generated 78% of trading on crypto exchange Mercado Bitcoin, with USDT volume jumping nearly 800% and bitcoin volume surging 865% from the previous Sunday, the exchange said.
The burst of trading came as investors feared Lula's platform of increased social spending and a ban on online betting would worsen the country's finances, adding to pressure on the real. On Monday, the benchmark Ibovespa stock index crashed 14%, its worst day since March 2020, and the dollar jumped more than 8% against the real, its largest daily gain since 1999.
“For investors, this reinforces the logic of not relying only on the real,” said Pedro Fontes, a research analyst at Mercado Bitcoin. “In this scenario of higher exchange rate pressure, 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 surge extended beyond Mercado Bitcoin. Data from Biscoint, which tracks prices across 10 venues including Binance, showed USDT turnover against the real rose 150% from the previous Sunday, while USDC volume jumped 318%. On Monday, combined stablecoin turnover reached 1.84 billion reais ($350 million), 65% higher than the previous week.
The trading frenzy contrasted with the market's reaction three weeks earlier, when Bolsonaro finished ahead in the first round and the Ibovespa gained 7.7%. Lula's victory made him the first Brazilian presidential candidate to win after finishing second.
Prediction markets had heavily favoured Bolsonaro, with Kalshi putting his chances at 84% days before the vote. Einar Knobel, CEO of sports data company TxODDS, said the markets were trading the first-round result and poll headlines. “I would not read this as a failure of prediction markets,” he said. “The mechanism did what it is designed to do with the information it was given.”
Analysis
Why This Matters
- Brazilian companies used stablecoins as a real-time hedge when traditional markets were closed, demonstrating a growing role for crypto in corporate treasury management during political uncertainty.
- The episode highlights the currency risk in emerging markets and the appeal of dollar-pegged assets as a store of value when local currencies face pressure.
- Prediction markets' mispricing of the election outcome raises questions about their reliability in politically volatile environments, though defenders argue they reflected available information.
Background
Brazil's presidential election pitted incumbent Luiz Inácio Lula da Silva against challenger Flávio Bolsonaro. Lula's platform of expanded social spending and a ban on online betting raised concerns about fiscal discipline, while Bolsonaro was seen as more market-friendly. The first round on October 4 placed Bolsonaro ahead, but Lula won the runoff on October 25. Brazilian financial markets reacted sharply, with the Ibovespa falling 14% and the real weakening more than 8% against the dollar on the Monday after the vote.
Key Perspectives
Pedro Fontes (Mercado Bitcoin research analyst): said the election result reinforces the logic of not relying only on the real, and that stablecoins offer a simple way to dollarise assets at any time from low amounts.
Einar Knobel (CEO of TxODDS): said prediction markets were trading the first-round result and poll headlines, and that the mechanism did what it was designed to do with the information it was given.
Mercado Bitcoin corporate clients: drove 78% of the exchange's election-day volume as they sought to protect their treasuries, the exchange reported.
What to Watch
- How Brazilian companies adjust their treasury strategies if the real remains under pressure and corporate adoption of stablecoins continues to grow.
- Potential regulatory responses from Brazilian authorities to the use of crypto for currency hedging, especially if volumes remain elevated.
- Whether prediction markets adjust their models to better capture polling data and political risk after this high-profile miss.
Checked
12 claims in this story checked against 1 source: 8 supported.
Show each claim
- SupportedBrazilian companies turned to stablecoins on election day to dodge a currency crash.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “Brazilian companies turned to stablecoins on election day to dodge a currency crash.”
- Partly supportedCorporate accounts drove 78% of Mercado Bitcoin's election-day volume after Lula's unexpected win.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “Corporate accounts drove 78% of Mercado Bitcoin’s election-day volume as companies sought to hedge currency risk while traditional markets were shut.”
- SupportedCorporate accounts generated 78% of Mercado Bitcoin's trading volume.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: ““Retail customers were responsible for just 22% of trading volume, while MB’s corporate clients generated 78% of the total for Sunday.””
- SupportedMercado Bitcoin's USDT volume jumped nearly 800% from the previous Sunday.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “USDT volume on crypto exchange Mercado Bitcoin jumped nearly 800% and bitcoin volume surged 865%.”
- SupportedMercado Bitcoin's bitcoin volume surged 865% from the previous Sunday.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “Trading in bitcoin BTC$84,459.46 surged 865% compared with the previous Sunday, the exchange said.”
- Partly supportedFontes said: “For investors, this reinforces the logic of not relying only on the real.”CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: ““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 shared with CoinDesk.”
- SupportedOn Monday, the Ibovespa fell 14%, its worst day since March 2020.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “the benchmark Ibovespa stock index crashed 14% in its worst performance since March 2020”
- SupportedOn Monday, the dollar rose more than 8% against the real, its largest daily gain since 1999.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “the dollar jumped more than 8% against the real, its largest daily gain since 1999.”
- Partly supportedLula became the first Brazilian presidential candidate to win after finishing second.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “Lula´s victory made him the first presidential candidate in Brazil’s modern democracy to secure a victory after finishing in second place.”
- Partly supportedKalshi put Bolsonaro's chances of winning at 84% days before the vote.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “In an Oct. 24 preview, Kalshi put his chances of winning at 84%”
- SupportedKnobel said prediction markets traded the first-round result and poll headlines, and that the mechanism did what it was designed to do with the information it had.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: ““[Prediction markets] were trading the first-round result, poll headlines and the story built around them,” Einar Knobel, CEO and co-founder of sports data and technology company TxODDS, told CoinDesk in an emailed statement. “I would not read this as a failure of prediction markets,” Knobel said. “The mechanism did what it is designed to do with the information it was given.””
- SupportedOn Monday, combined stablecoin turnover reached 1.84 billion reais ($350 million), 65% higher than the previous week.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “The surge extended into Monday, with combined USDT and USDC turnover reaching 1.84 billion reais ($350 million), 65% higher than in the previous week”