Brazilian companies pile into USDT, USDC as Lula win triggers worst stock crash since 2020

Brazilian businesses rushed into dollar stablecoins after Luiz Inácio Lula da Silva won the October 25 runoff, accounting for 78% of Mercado Bitcoin’s trading volume as USDT turnover rose nearly eightfold and the Ibovespa suffered its worst session since March 2020.

Corporate demand drives stablecoin trading on Mercado Bitcoin

The most striking development was the concentration of activity among business customers. According to Mercado Bitcoin, retail traders generated 22% of the exchange’s October 25 volume, while corporate accounts contributed the remaining 78%.

The platform attributed the increase largely to companies seeking protection against exchange-rate uncertainty.

Tether’s USDT recorded nearly an eightfold increase in turnover compared with the previous Sunday. Bitcoin trading also climbed by 865% over the same period, indicating that the election-related market response extended beyond stablecoins.

Pedro Fontes, a research analyst at Mercado Bitcoin, argued in an analysis reported by CoinDesk that businesses had reasons to diversify their exposure beyond the Brazilian real.

He pointed to dollar-linked tokens such as USDT and USDC as accessible options for holding dollar-denominated value, including when conventional foreign-exchange markets are closed.

This helps explain why stablecoin trading can accelerate during periods of political uncertainty. Businesses with operating expenses, international suppliers or dollar-linked obligations may seek to reduce their exposure to a weakening domestic currency.

Every completed trade involves both a buyer and a seller, and the reported figures do not establish the net amount of capital that businesses converted into dollar-backed tokens.

USDT and USDC volumes rise across Brazilian exchanges

The surge was not confined to Mercado Bitcoin. Data attributed to Biscoint, a market tracker covering 10 cryptocurrency trading venues, showed that USDT trading against the Brazilian real increased by 150% from the previous Sunday. USDC turnover rose by 318% over the same comparison period.

By Monday, the combined turnover of USDT and USDC had reached approximately 1.84 billion Brazilian reais, equivalent to about $350 million. That represented a 65% increase from the previous week’s comparable figure.

Bitcoin activity also expanded, with reported trading exceeding 1,336 BTC on Monday, more than nine times the volume recorded the previous Monday.

Binance recorded a similar divergence between local and global trading pairs. Its BTC/BRL turnover increased by 370%, while activity in the global BTC/USDT pair declined by 25%. Bitcoin gained 9.4% when measured in reais but slipped 0.2% against USDT.

Stablecoin trading volumes can therefore provide useful information about local demand for dollar-linked assets. However, volume alone cannot establish whether the activity reflects long-term hedging, short-term speculation, arbitrage between exchanges or a combination of these factors.

Lula’s victory reverses market expectations

The election outcome surprised financial markets that had anticipated a Bolsonaro victory. Earlier in October, after Flávio Bolsonaro finished ahead of Lula in the first round, the Ibovespa rose 7.7%, while the real strengthened by more than 4% against the dollar.

Investors had viewed a potential change in government as an opportunity for tighter public-spending controls. Lula’s victory challenged those expectations, bringing renewed attention to government expenditure, public debt and the country’s ability to manage its finances.

The reaction became particularly visible when traditional markets reopened on October 26. The Ibovespa dropped 14%, marking its worst session since March 2020, while the dollar’s gain against the real exceeded 8%.

Prediction markets had also leaned towards Bolsonaro. An October 24 preview from Kalshi assigned him an 84% probability of winning, although the same report acknowledged that opinion polls indicated a closely contested race.

Brazil’s crypto regulation adds another risk factor

The increase in stablecoin activity comes as Brazil strengthens its regulatory framework for cryptocurrency businesses.

According to crypto.news, exchanges face an October 30 deadline to apply for authorization from the Central Bank of Brazil under the new licensing framework.

Companies that do not enter the authorization process must wind down their operations in accordance with the applicable rules.

Stablecoins also carry risks that investors should not overlook. Although USDT and USDC are designed to maintain a value close to one US dollar, their practical usefulness depends on factors including redemption arrangements, liquidity, issuer-related risks and access to reliable trading venues.

The latest figures make stablecoin trading an important development to watch in Brazil, particularly as businesses respond to changes in currency values and the regulatory environment.

Brazil’s post-election market reaction demonstrates how political developments can reshape activity across traditional finance and cryptocurrency exchanges.

Whether the increase continues will depend on currency movements, business demand for dollar exposure, investor confidence and the evolving rules governing digital asset services.