The current crisis in the United States is causing a historic decline in the dollar, which has fallen to its lowest level against the euro since 2021. This is an unfavorable environment for European crypto investors, who typically hold USD-denominated assets. How can they protect themselves?
The euro hits $1.20: Is this good news?
The dollar is trading at a historic low against the euro at the start of this year, having lost about 10% of its value over the past 12 months—a decline that has accelerated significantly in recent days following a sharp drop of approximately 4%.
As a result, the euro traded above $1.20 yesterday for the very first time since June 2021. The cause: almost certainly a significant weakening of the dollar linked to Donald Trump’s domestic and foreign policies rather than any real strength of the euro during this turbulent period.
The dollar is falling against the euro
Faced with this situation, the U.S. president asserts that the dollar’s decline “is a great thing,” particularly to boost American exports. A statement that at least has the merit of not causing the USD exchange rate to rebound—quite the opposite.
European crypto investors may have a more mixed reaction, as they watch the dollar-denominated balance of their portfolios plummet even further, following weeks of already significant declines in the cryptocurrency market.
Perhaps this is an opportunity to explore decentralized finance (DeFi) offerings, particularly using euro-pegged stablecoins.
How to make your euros grow?
Currently, euro-pegged stablecoins account for a tiny fraction of this market, less than 1%. What some see as a weakness actually represents enormous growth potential, especially given the dollar’s sharp decline.
In this space, the EURC token from the giant Circle stands out as the market leader, with a presence on major cryptocurrency exchanges like Coinbase, Kraken, and Bybit, as well as decentralized markets such as Uniswap.
Others, such as Société Générale-FORGE’s EURCV, are available on European-scale platforms like Bitpanda.
As for DeFi offerings linked to the euro, there are various options across several platforms:
- Bitpanda, which offers a yield linked to the EURCV stablecoin;
- Deblock, with a savings system for your euros;
- The YO protocol and its automated yield vault for the EURC;
- The fintech firm Spiko and its tokenized money market funds in euros.
Of course, it is also possible to go more directly through DeFi protocols such as Morpho or the well-known Aave and its Push service, designed to expand its operations in the euro stablecoin sector with its GHO token.
