As the US dollar weakens, opportunities arise for the role of the euro in the crypto economy. The increase in euro-backed adoption of stubcoins reflects European investors’ desire to counter foreign exchange drugs on assets awarded by dollars.
Luke Nolan, senior research associate at Coinshares, told Beincrypto he expects this trend to continue, but he doesn’t expect the role of the US dollar to be completely erased from the photos.
The dollar’s lowest in 50 years
The US dollar has been declining significantly and rapidly over the past few months. Performances in the first six months of 2025 were the worst for the first time since 1973.
According to Morgan Stanley, the value of the US dollar fell by about 11% against other currencies in the first half of this year, marking the biggest decline in over 50 years, ending its 15-year growth period.
Investor confidence in the US economy and its assets has been undermined by unpredictable government policies, particularly with regard to tariffs and trade.
The recently passed “one big beautiful bill act” exacerbated these concerns by increasing fears about an increase in fiscal deficits and the country’s increased debt.
These policies have led investors to move away from US government bonds. Given the continued use of these policies, Morgan Stanley predicted that the dollar would fall further 10% by the end of 2026.
As investors’ focus moves away from the US concept of exceptionalism, currencies like the euro, the main competitor of the dollar, may be gained. This trend can be particularly pronounced in the crypto sector.
Is the dollar’s crypto domination coming to an end in Europe?
The previously uncontroversial stability and domination of the US dollar have traditionally served as the foundation of the global financial system. The cryptocurrency market is no exception.
For many European investors, the recent dollar decline has caused confusing problems. On the surface, a stable Bitcoin price in the dollar may seem like a good thing. However, this hides the dynamics of the important underlying currency.
“If European owners hold Bitcoin purchased on the exchange and the prices remain exactly the same, but the dollar has weakened against the euro, the owners will actually lose that difference,” Nolan told Beincrypto.
This forex drug shows why European investors are becoming more aware of the risks of currency. They find that their returns are not only linked to Bitcoin performance, but also directly exposed to the strength or weakness of the US dollar.
“This appears in BTC/EUR sects, because even if the owner cashes, even a dollar, if it returns to the euro, it ends with less than an investment,” Nolan added.
Faced with this problem, European investors are taking practical steps to isolate their crypto portfolios from dollar volatility.
Countering foreign exchange drugs
The long-term dollar strength has previously made buying into dollar-denominated assets attractive, offering what Nolan calls European investors “double victory.” However, current macroeconomic changes have reversed the dynamics.
As a result, there is a prominent pivot on euro-denominated transactions. This reassessment of currency risk is also reflected in market data.
According to a Kaiko survey, the trading pair cited on European exchanges on USD Tether (USDT) fell in popularity in 2025. Market data providers also found that ETH/EUR pair liquidity doubled year-on-year, indicating that the trend exceeds Bitcoin alone.
For European investors, this change is not just about strategic changes, but also about a direct response to macroeconomic forces.
“I think it will have an impact, but it’s not on a massive scale… Now, if you buy by using the dollar to buy (or cash out through them) with denied stubcoins, it will be a dual one: do you think Bitcoin will outweigh the USD/EUR pair?” Nolan said.
As Nolan pointed out, they are working to “partially cancel this FX drug” by trading and holding crypto in the native Europair, heading towards a more direct and less risky way to join the digital asset market.
This change suggests that the European market is mature and is developing its own methods and infrastructure for specific economic circumstances.
A new era of euro-denominated assets
The shift to euro-denominated trading has brought a new focus on euro-covered stubcoins.
Though they are minor players in the Crypto sector, their recent growth cannot be denied. These digital assets provide a way to trade on the blockchain without being exposed to the weakening of the dollar.
“It’s notable, but still a small fish in the grand scheme of things. The Euro (Circle) grew to 211M to 55% YTD. The EURS (STATIS) grew to 31% YTD.
The practical utilities of these stubcoins are particularly important for professional investors and businesses. They provide a way for the Treasury to hold funds in crypto assets without taking any foreign exchange risk. This ability to manipulate directly in euro terminology is a major attraction.
“The Treasury desk can sit completely in EUR terminology. This avoids (at least partly) the risk of FX. So, if the dollar continues to weaken, I think euro-specific stubcoins may gain more popularity,” added Nolan.
This recent trend also raises greater questions about the long-term role of the dollar in the crypto market.
Will the dollar dominance in Crypto be eroded?
A new shift to the euro and broader global dolling efforts will consider whether the crypto market will follow suit.
According to Nolan, the results are subtle and perhaps not as extreme as the term suggests. The rise of euro-denominated products is important, but it is unlikely to fundamentally affect cryptocurrencies. The pure scale and dominance of Stablecoins on the USD page continues to strengthen the global role of the dollar.
“I think it’s very unlikely that it will affect the crypto market as a whole. The USD silly thing is still growing very quickly and actually supports global dollarization as it is a natural buyer for the US Treasury,” he explained.
However, this does not mean that the trend should be rejected. The full-scale derailment is not imminent, but Nolan acknowledges that market changes are clear. For example, the growth of stablecoins in the Euro family provides a concrete metric for this change.
“By the end of the year, we expect to see more than $1 billion in stablecoins, the euro,” Nolan added.
This trend illustrates a future where the crypto market is becoming more diverse. The dollar will likely remain in the lead, but the euro and other currencies will be more influential. This creates a more localized and less risky environment for investors and businesses.
Crypto investment may have been the first to come as the post weakens the dollar and surges euro stubcoins.
