Brazilian stock markets opened under heavy selling pressure on Monday. Over $200 billion was wiped from local market capitalization after Lula da Silva defeated Senator Flávio Bolsonaro in the presidential runoff. Analytics account WatcherGuru on X also reported that more than $200 billion vanished from Brazil’s stock market as trading commenced.
The US dollar jumped as much as 12% against the Brazilian real, while the benchmark Ibovespa stock index tumbled up to 17% toward the 170,000-point level. The steep decline forced the São Paulo stock exchange (B3) to halt trading for 30 minutes after the index dropped 10%. This temporary halt, or circuit breaker, marked the first at the B3 exchange since the COVID-19 pandemic.
Abroad, the iShares Brazil ETF (EWZ), which holds a portfolio of Brazil’s largest corporations, slumped by as much as 26% at its lowest point. The 26% drop in the equity fund mirrored the scale of losses typically seen in speculative assets such as meme coins.
The sharp swings on the stock exchange came as the election outcome reversed expectations that had built up across financial markets.
Market Bets at Odds with the Ballot Box
Ahead of the runoff, the Ibovespa index had gained 7.85% and the EWZ advanced more than 10% following the first-round results on October 4, when Bolsonaro led with 47.03% of the vote against Lula’s 45.16%. That narrow first-round lead had spurred optimism among capital market investors.
On prediction market platforms, Polymarket placed Bolsonaro’s odds of winning at 82% just one day before the vote. On the morning of election day, Kalshi also put the senator’s chances at 80%. These betting market figures stood in sharp contrast to the final public polls, which indicated a dead-heat 50-50 race between the two candidates.
Official tallies from Brazil’s Superior Electoral Court confirmed Lula’s victory with 51.79% of the vote against 48.21% for Bolsonaro, a margin of roughly 4.4 million voters. Political tensions rose again after Bolsonaro announced he did not recognize the election results and prepared to challenge them in court.
Market Pressure Spills Over to Bitcoin
The sell-off across Latin American equities did not happen in isolation. Flagship cryptocurrency Bitcoin also fell under pressure alongside other risk assets amid global risk-off sentiment. Liquidity was pulled from various market instruments as investors reacted to political uncertainty in Brazil.
For crypto market participants, the turmoil on the São Paulo exchange showed that digital assets remain subject to global macroeconomic sentiment. As election uncertainty and legal challenges triggered portfolio liquidations in conventional markets, Bitcoin was dragged down in tandem with other risk assets.
Reported via Decrypt.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
