Crypto Collateralized Lending Declines 4.9% to $39.07 Billion in Q1
Leverage in the crypto economy is evolving, as shown in Galaxy Research’s Q1 2025 report.
- Total crypto-collateralized lending fell 4.9% QoQ to $39.07 billion, marking the first decline since late 2023.
- DeFi lending experienced a 21% drop early in the quarter but rebounded sharply by over 30% by late May, driven by Aave’s integration of Pendle tokens.
- CeFi lending rose 9.24% to $13.51 billion, primarily led by Tether, Ledn, and Two Prime; actual figures may be 50% higher due to undisclosed private lending.
- Bitcoin treasury companies are emerging as new leverage sources, with total outstanding debt reaching $12.7 billion, maturing between 2027 and 2028.
- CME reports rising open interest in ether futures, indicating increased institutional involvement, while Hyperliquid captures growing retail interest in perpetual futures.
The interconnected market structure suggests that stress in one area can quickly impact others, indicating that leverage in crypto remains significant despite fragmentation.