The current crisis in the United States has led to 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 are usually exposed to the USD. How can they protect themselves?
The euro reaches $1.20: is this good news?
The dollar is trading at a historic low against the euro at the start of the year, having fallen by around 10% over the last 12 months and accelerating significantly in recent days following a sharp decline of around 4%.
As a result, yesterday the European currency rose above $1.20 for the first time since June 2021. This is more likely due to a significant weakening of the dollar linked to Donald Trump’s domestic and foreign policy than to any real strength of the euro in these turbulent times.
Faced with this situation, the US president claims that the fall in the dollar “is a great thing,” particularly in terms of boosting US exports. This statement at least has the merit of not causing the USD to rebound, quite the contrary.
The outlook is perhaps more mixed for European crypto investors, who are seeing the value of their dollar-denominated portfolios fall even further, after weeks of already significant declines in the cryptocurrency market.
Perhaps this is an opportunity to test out decentralized finance (DeFi) offerings, particularly those using euro-pegged stablecoins.
How can you make your euros grow?
At present, euro-pegged stablecoins represent a tiny share of this market, less than 1%. Some see this as a weakness, but it actually represents enormous potential for growth, especially given the sharp decline of the dollar. In this field, the EURC token from the giant Circle is the clear leader, with a presence on major cryptocurrency exchanges such as Coinbase, Kraken, and Bybit, as well as decentralized markets such as Uniswap.
Others, such as Société Générale-FORGE’s EURCV, are available on European platforms such as Bitpanda.
As for DeFi-type offerings linked to the euro, there are various options on several platforms:
- Bitpanda, which offers a return linked to the EURCV stablecoin;
- Deblock, with a savings system for your euros;
- The YO protocol and its automated yield vault on the EURC;
- The fintech 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 famous Aave and its Push service, which aims to expand its activity in the euro stablecoin sector with its GHO token.
