From Decrypt · By Jose Antonio Lanz
In brief
Brazil’s stock market lost more than $200 billion in value at Monday’s open, and the iShares MSCI Brazil ETF (EWZ) fell as much as 26% after Lula beat Flávio Bolsonaro.
Polymarket and Kalshi priced Bolsonaro at roughly 80% before the vote; Lula won 51.79% to 48.21%.
The dollar jumped as much as 12% against the real, B3 triggered its first circuit breaker since the pandemic, and Bolsonaro said he will seek to annul the election.
Brazil’s stock market lost more than $200 billion in value at the open on Monday after President Luiz Inácio Lula da Silva beat Senator Flávio Bolsonaro in Sunday’s runoff, a result that prediction markets had priced at roughly a one in five chance.
The iShares MSCI Brazil ETF, ticker EWZ, a basket of Brazilian stocks that trades in New York like a single share, fell as much as 26% from Friday’s close of about $42.60, touching $31.40 before trimming the loss to about 23% at $32.84 by 10:38 a.m. ET.
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That is memecoin-sized volatility for a fund built around Brazil’s biggest companies, and it leaves EWZ roughly where it started 2026 after a 34% gain through Friday.
The dollar rose as much as 12% against the real on Friday, while the Ibovespa, Brazil’s benchmark stock index, fell as much as 17% to about 170,000 points. For a dollar-based investor, those moves at their worst combine to a loss of about 26%, in line with the ETF’s low.
B3, the São Paulo exchange, halted trading for 30 minutes after the Ibovespa fell 10% from Friday’s close, its first circuit breaker since the COVID-19 pandemic. A circuit breaker is an automatic pause meant to slow panic selling, but the index kept sliding after trading resumed.
Investors had been positioning for the opposite result since Bolsonaro unexpectedly finished first in the Oct. 4 first round, with 47.03% of valid votes to Lula’s 45.16%. The Ibovespa jumped 7.85% the next day and EWZ gained more than 10% on bets that Bolsonaro would tighten public finances and open the way to lower interest rates. Monday’s drop erased that rally and, at its lows, left the Ibovespa about 11% below its Oct. 2 close.
But Lula didn’t just beat Bolsonaro, he also beat prediction markets.
Polymarket gave Bolsonaro an 82% chance of winning the day before the vote, and Kalshi had him near 80% on Sunday morning. Both platforms are prediction markets, where a contract that pays $1 if a candidate wins trades at 80 cents when traders see an 80% chance.
BitcoinBTC · USD$80,004−2.41%Oct 19Oct 21Oct 23Oct 24Oct 26$84.8k$83.1k$81.3k$79.6k24h HighHigh$80,82524h LowLow$79,332VolVol$1.2B→Buy Bitcoin with USDTPowered by JupiterPrice data by CoinGeckoCoinGeckoMore Bitcoin news and projections →Polling pointed to a coin flip rather than a favorite, with the latest Datafolha survey tied at 50% each among valid votes and CNT/MDA showing Bolsonaro ahead 50.5% to 49.5% in mid-October. Lula won 51.79% to 48.21%, a margin of about 4.4 million votes, according to Brazil’s Superior Electoral Court.