Brazilian firms use stablecoins to hedge risk after Lula's election win

On Mercado Bitcoin, USDT volume rocketed by nearly 800%, while Bitcoin volume surged 865% from the preceding Sunday. Corporate accounts accounted for 78% of the exchange's volume as companies hedged risk while traditional markets were closed.

The Ibovespa index plummeted 14% on Monday, marking its worst day since 2020, following Luiz Inácio Lula da Silva's victory over Flávio Bolsonaro.

A Mercado Bitcoin analyst noted that "For investors, this reinforces the logic of not relying only on the real." He added that in such high exchange rate pressure scenarios, stablecoins like USDT and USDC offer a straightforward path to dollarize assets anytime, starting with small amounts.

Data across ten venues, tracked by Biscoint, showed USDT turnover against the real climbed 150% from the prior Sunday, with USDC volume jumping 318%.

The market reaction sharply contrasted with three weeks prior; when Bolsonaro led in the first round, the Ibovespa rose 7.7% and the dollar weakened over 4% against the real.

Lula's win, which made him the first modern Brazilian president to win after finishing second, spurred concerns over national finances due to his platform of increased social spending and a ban on online betting.

Meanwhile, on Binance, BTC/BRL turnover increased 370%, yet the global BTC/USDT pair saw a 25% decline, as Bitcoin gained 9.4% against the real but slipped 0.2% against USDT.

Why it matters

This shows major corporate players are using stablecoins to hedge against political uncertainty and potential currency devaluation in Brazil. Investors should watch how quickly this flight to stablecoins reverses as economic clarity emerges post-election.