Brazilian companies rushed into stablecoins and bitcoin on election day to hedge currency risk after incumbent Lula unexpectedly defeated Bolsonaro in a runoff vote on October 25, triggering a sharp reversal from pre-election market expectations.
USDT volume on Mercado Bitcoin jumped nearly 800% from the previous week, while bitcoin trading surged 865% compared with the previous Sunday. Combined USDT and USDC turnover reached 1.84 billion reais (approximately 350 million dollars) on Monday. Corporate accounts accounted for 78% of Mercado Bitcoin’s election-day volume, with retail customers responsible for the remaining 22%.
“The main driver of volume was companies seeking to protect their treasuries. Retail customers were responsible for just 22% of trading volume, while MB’s corporate clients generated 78% of the total for Sunday,” Mercado Bitcoin said in a statement.
Pedro Fontes, research analyst at Mercado Bitcoin, characterized stablecoins as a practical hedge against currency collapse. “For investors, this reinforces the logic of not relying only on the real. 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,” Fontes said.
Market Reaction Across Venues
The stablecoin surge extended beyond Mercado Bitcoin. USDT and USDC turnover rose 150% from the previous Sunday across 10 crypto venues combined. USDC volume alone jumped 318% across those platforms. Stablecoin turnover increased 65% versus the previous week.
Bitcoin trading volume on Monday reached 1,336 BTC. On Binance, the BTC/real pair surged 370%, though the global BTC/USDT pair declined 25%. Bitcoin gained 9.4% against the real but slipped 0.2% against USDT.
Traditional markets reflected the shock. The Ibovespa stock index fell 14% on Monday. The dollar gained 8% against the real, marking the largest daily dollar-real gain since 1999.
Prediction Market Miscall
Prediction markets had signaled a different outcome. Kalshi’s platform showed Bolsonaro at 84% win probability on October 24. Across prediction markets, Bolsonaro was priced as roughly 80% favorite, yet Lula won the runoff.
Lula was the first presidential candidate in Brazil’s modern democracy to secure victory after finishing in second place in the first round. Three weeks earlier, after Bolsonaro finished ahead in the first round, the Ibovespa had jumped 7.7% and the dollar had weakened more than 4% against the real.
Einar Knobel, CEO and co-founder of TxODDS, defended prediction market mechanics despite the miss. “[Prediction markets] were trading the first-round result, poll headlines and the story built around them. I would not read this as a failure of prediction markets. The mechanism did what it is designed to do with the information it was given,” Knobel said.
Fiscal Concerns Driving Hedges
Lula’s platform included increased social spending and a ban on online betting, both of which sparked investor concerns about Brazil’s fiscal health and currency pressure. Rising debt, new spending commitments, and limited scope for tax increases complicated fiscal management prospects. Stronger opposition in Congress could further complicate efforts to address fiscal problems.
Corporate clients on Mercado Bitcoin typically maintain a maximum of 15% of their asset holdings on the platform, according to the exchange. The scale of Monday’s activity reflected the urgency of the hedge.
