As the dollar and stock market swung sharply following Brazil’s election results, companies’ search for ways to protect their money led to a major increase in Bitcoin and dollar-backed stablecoin trading.
According to CoinDesk, around Luiz Inácio Lula da Silva’s election victory over Flávio Bolsonaro, companies turned to crypto markets to hedge their treasuries against currency risk. On Sunday, companies accounted for 78 percent of trading volume on Mercado Bitcoin, while individual customers made up 22 percent.
Trading volume for USDT on the exchange rose by about 800 percent from the previous week, exceeding three times the average of the previous four Sundays. Bitcoin volume, meanwhile, climbed 865 percent compared with the previous Sunday.
Dollar posts its sharpest daily gain since 1999
On Monday, the dollar rose more than 8 percent against the Brazilian real, posting its biggest daily gain since 1999. The Ibovespa index also fell 14 percent, marking its worst daily performance since March 2020.
Mercado Bitcoin cited companies’ desire to protect their assets as the main reason for the surge in trading volume. Exchange research analyst Pedro Fontes said concerns about public spending and debt burdens could increase pressure on the currency, adding that stablecoins such as USDT and USDC are being used to tie part of companies’ assets to the dollar.
Stablecoin volume reaches $350 million
The activity was not limited to Mercado Bitcoin. According to data from Biscoint, which tracks 10 platforms including Binance, on election day, USDT volume against the real rose 150 percent, while USDC volume increased 318 percent.
On Monday, the combined volume of the two stablecoins reached 1.84 billion reais, or about $350 million, up 65 percent from the previous week. Bitcoin trading volume also rose more than ninefold to 1,336 BTC.
On Binance, Bitcoin’s trading volume against the real climbed 370 percent, while volume in the global BTC/USDT pair fell 25 percent. This divergence showed that the increase in trading in Brazil coincided with local currency movements.
Bitcoin rises against the real, falls against USDT
Over the same period, Bitcoin gained 9.4 percent against the real while falling 0.2 percent against USDT. The increase seen when measured in the local currency reflected the real’s depreciation more than a global price surge in Bitcoin.
Not investment advice.