European Traders Shift to Euros as Dollar Falls 11% in 2025

European traders are recalibrating their cryptocurrency strategies amid a sharp decline in the U.S. dollar. In the first half of 2025, the greenback lost roughly 11% against major currencies, its worst mid-year drop since the 1970s [1]. This weakness has prompted traders based in the euro zone to reconsider the structure of their crypto holdings. Even as cryptocurrency prices remain steady in dollar terms, the act of converting back to euros has eroded returns, pushing many to transact and hold assets in their local currency instead of relying on U.S. dollar settlements [1].

The growing preference for euro-denominated trading is evident on European exchanges, where liquidity in ETH/EUR pairs has more than doubled in the past year. At the same time, trading in USD Tether pairs has been on a downward trajectory. This trend reflects a strategic move to minimize exposure to volatile exchange rates rather than engaging in speculative currency plays [1]. The advantages of this approach are clear: by keeping transactions and holdings in euros, investors can reduce potential losses from a depreciating dollar and achieve more predictable returns in their home currency [1].

In parallel, demand for euro-pegged stablecoins is on the rise, even though their market share still lags behind that of U.S. dollar-pegged counterparts. Coins such as EURC and EURS have seen double-digit increases in market capitalization this year, with the total euro-stablecoin supply approaching $600 million. For institutional investors and businesses, these euro-backed assets provide a practical on-chain alternative to U.S. dollar exposure. If current trends persist, euro-stablecoin adoption could surpass $1 billion before 2026 [1].

While the euro’s growing presence in the crypto space is notable, analysts emphasize that the U.S. dollar remains dominant in the ecosystem. USD-backed stablecoins continue to hold the majority of the $250 billion stablecoin market, supported by their scale, deep exchange integration, and backing from U.S. treasuries. However, the gradual shift toward euro-based assets suggests a broader diversification trend may be underway. As European markets develop their own infrastructure and traders seek to limit exposure to currency volatility, the balance of power in crypto’s monetary base could begin to shift [1].

The dollar’s trajectory remains uncertain. With upcoming U.S. inflation data expected to show a rise in headline inflation to 2.8% year-on-year and core inflation reaching 3%, the Federal Reserve faces a difficult decision on its monetary policy path. Some analysts predict a rate cut in September if labor market data continues to cool, but a stronger-than-expected inflation report could delay such action [3]. Political voices, including Trump, have also weighed in, arguing that a weaker dollar can boost trade and financial returns, despite conventional wisdom favoring a strong greenback [5]. These views align with the growing sentiment among traders who are seeking to insulate their portfolios from dollar depreciation.

The interplay of economic, political, and market forces continues to shape the crypto landscape. As European investors increasingly embrace euro-based strategies, they are navigating a complex and dynamic environment. The move away from dollar exposure reflects a pragmatic approach to risk management in an era of global uncertainty. With the U.S. dollar’s dominance in question, the future of crypto’s monetary architecture may look increasingly diverse [1].

Source:

[1] Coindoo, Dollar Weakness Pushes European Traders to Rethink Crypto Holdings, https://coindoo.com/dollar-weakness-pushes-european-traders-to-rethink-crypto-holdings/

[2] LMAX, Dollar Dives as CPI Fuels Rate Cut Bets, https://www.lmax.com/blog/gfxi/dollar-dives-as-cpi-fuels-rate-cut-bets/

[3] FXStreet, USD/CAD Crawls Higher, Approaches 1.3800 Ahead of the US CPI Release, https://www.fxstreet.com/news/usd-cad-crawls-higher-approaches-13800-ahead-of-the-us-cpi-release-202508121000

[4] The, Michael J. de la Merced - Page 9, https://www.nytimes.com/by/michael-j-de-la-merced?page=9

[5] AOL.com, Trump: Strong Dollar Sounds Good But 'You Make a Hell of a Lot More Money with a Weaker Dollar,' https://www.aol.com/news/trump-strong-dollar-sounds-good-164837325.html