$73B Crypto Lending Boom Shows The Market Has Rebuilt Its Leverage later than FTX Collapse
The crypto lending market has surged to a new record, with $73.6 billion in outstanding loans reported for the third quarter of 2025. This surpasses the previous peak hit just ahead of the FTX collapse in late 2021. The data, compiled and cited by industry trackers such as , suggest that despite the fallout from the FTX scandal, crypto markets have re-invented the wheel, which could signal both renewed confidence and fresh vulnerabilities.
The spike in crypto lending was driven by retail borrowers, crypto treasury firms, and institutional players, pointing to a broader structural shift from the 2022 “credit winter” back to a leverage-enabled growth environment. At the identical time, some analysts warn that the architecture of borrowing remains deeply interconnected, raising concerns around systemic contagion should asset prices reverse.
What’s Fueling the Crypto Lending Surge?
According to the reported data, crypto lending jumped nahead 3x compared with Q1 2024, when the market was still recovering from last-cycle disruptions. The $73.6 billion amount thumps the $69.4 billion recorded in Q4 2021, a period that immediately preceded multiple platform bankruptcies, including the .
Following FTX’s collapse, many retail-facing lenders and platform-backed credit desks imploded under the weight of cascading liquidations and counterparty defaults. Regulatory and industry responses followed, including tighter custody rules, more transparent disclosures, and improved auditing standards.
The development resulted in a number of positives for . First, borrowers use cryptocurrencies as collateral to access cash or stablecoins from crypto treasury units and decentralized finance (DeFi) protocols. Also, retail and institutional appetite is returning rapidly amid increasing crypto prices and easier access to crypto lending products.
Plus, there’s been an increase in yield-viewking behavior among investors and traders, where borrowed funds are deployed into high-yield crypto platforms, staking, or token-based arbitrage for gains.
Experts Flag Ongoing Crypto Lending RisksÂ
While there have been improvements to digital asset lending since 2021, analysts at Galaxy and other research institutions caution that where the structure is stronger, so are the risks. The risk architecture shows familiar lines, including increasing debt, collateralized by volatile assets, riding on bullish sentiment.
They argue that borrowing is no longer siloed inside pure crypto ecosystems due to increasing transmission channels. Now, crypto lending feeds into regulated markets and mainstream capital pools. As such, the high volume of borrowing raises questions about systemic risk. The concerns include collateral dependency from many loans being backed by crypto assets like , which could result in a sharp downturn and force a quick unwind and loss.
Additionally, some borrowing flows are layered. For example, DeFi protocols lending into centralized brokerages, which then lend further, thereby increasing interdependence. In short, these analysts argue the market may have rebuilt leverage — but the identical triggers that caused large-scale failures remain present.
