tl;dr
As the US dollar weakens, the Euro is gaining prominence in the crypto economy, with European investors increasingly adopting Euro-backed stablecoins to hedge against losses caused by dollar-pegged assets. The dollar has declined about 11% in the first half of 2025, marking its worst performance in ...
As the US dollar weakens, the Euro is poised to take on a larger role within the crypto economy. European investors are increasingly adopting euro-backed stablecoins to hedge against the foreign exchange drag posed by their dollar-pegged assets. Luke Nolan, a Senior Research Associate at CoinShares, anticipates this trend will continue, although he does not foresee the US dollar’s dominance disappearing entirely.
The US dollar has suffered its worst performance in over 50 years, declining around 11% against other currencies in the first half of 2025. This unprecedented drop marks the end of a 15-year growth period, fueled by shaken investor confidence amid unpredictable US government policies, rising budget deficits, and escalating national debt. Morgan Stanley predicts the dollar could drop another 10% by the end of 2026, opening the door for competitors like the Euro to gain ground, especially in cryptocurrency markets.
Historically, the dollar’s stability underpinned the global financial system and the crypto world alike. However, European investors now face a frustrating scenario: even when Bitcoin’s dollar price remains stable, a weakening dollar relative to the Euro means their real returns diminish when converted back to Euros. This foreign exchange drag is pushing European crypto holders to reconsider currency risk exposure and to start valuing returns in Euro terms.
In response, European investors have begun pivoting toward Euro-denominated trading pairs and stablecoins to mitigate the adverse effects of dollar volatility. Market research indicates a decline in USD Tether (USDT) trading pairs on European exchanges in 2025, with ETH/EUR liquidity doubling year-on-year. This shift reflects a more mature and regionally tailored crypto market that directly counters currency risk.
Euro-pegged stablecoins, although still modest in scale compared to their USD counterparts, have shown notable growth. For professional investors and corporates, these stablecoins offer a practical means to manage crypto assets in Euros, reducing foreign exchange exposure. As treasury desks increasingly operate in Euro terms, the popularity of Euro-pegged stablecoins is likely to grow if the dollar’s weakness persists.
Despite this momentum, the dollar’s supremacy in crypto remains robust, largely due to the scale and velocity of USD-pegged stablecoins that continue to support global dollarization by naturally purchasing US treasuries. Full de-dollarization of crypto markets is improbable in the near term. Nonetheless, the growing adoption of Euro-denominated crypto assets signals a more diversified future. The landscape is evolving toward a multifaceted ecosystem where the Euro and other currencies carve out significant roles alongside the dollar, fostering reduced risk and greater localization for investors and businesses alike.