Leverage about the crypto economy evolves, not evaporated.
The total crypto-collateral lending fell by 4.9% quarter-over quartaal to $ 39.07 billion, the first decrease since the end of 2023, according to the Q1 2025 report from Galaxy Research. But while the head of the head that has been contracted, the underlying dynamics does not suggest that leverage is shifting.
Lending in Decentralized Finance (Defi) Lending became a hit early in the quarter and slid no less than 21%before he returned sharply in April and May. The turnaround was largely powered by the integration of Aave van Pendeltokens, whose revenue structure and high loan value ratios (up to 90%) caused a wave of fresh loans. Towards the end of May, the borrowing of Defi had risen more than 30% of the lows, with Ethereum liding the recovery.
Centralized Finance (CEFI) Loans climbed 9.24% to $ 13.51 billion, led by Tether, LEDN and two Prime. Nevertheless, Galaxy notes that a limited series of public disclosures limits visibility to the true scope of centralized loans. Private agencies, OTC platforms and offshore credit providers probably push the actual totally much higher. Maybe with 50% or more.
Meanwhile Bitcoin
BTC$ 104,884.64
Treasury companies are quietly becoming a new systemic leverage junction. Companies such as Strategy (MSTR) have spent billions on convertible debts to finance BTC purchases. From May, the total outstanding debts between Treasury companies were at $ 12.7 billion, much of it intended to mature between 2027 and 2028.
In derivatives, CME’s rising open interest, especially in Ether
ETH$ 2,609.01
Futures signals that accelerate institutional participation. At the same time, UpStart Exchange Hyperliquid has carved a growing share in the Pepetual Futures market, which underlines the continuing power of leverage powered by the retail trade.
The report points to an increasingly interconnected market structure, a true stress in a single location or instrument can quickly return over the ecosystem. Leverage, in the current cycle of crypto, can be more fragmented than before – but it is no less powerful.