Crypto leverage diversified significantly in Q1 2025, moving beyond traditional lending as corporate bitcoin purchases and futures markets gained prominence, according to a Galaxy Digital report published June 4.

Galaxy Digital’s latest study written by research analyst Zack Pokorny notes that the overall crypto-collateralized lending market declined 4.88% quarter-over-quarter to $39.07 billion. This marked the first quarterly contraction since Q3 2023, according to the report.

Source: Galaxy’s report called “The State of Crypto Leverage – Q1 2025.”

Centralized finance (CeFi) lenders grew 9.24% to $13.51 billion, led by Tether ($8.83B), Ledn ($932.5M), and Two Prime ($884M). Conversely, decentralized finance (DeFi) lending applications saw borrows plunge 21.14% to $17.7 billion. The crypto-backed portion of collateralized debt position (CDP) stablecoins rose 25.56% to roughly $7.86 billion, Pokorny details.

Source: Galaxy’s report called “The State of Crypto Leverage – Q1 2025.”

The report further shows that stablecoin borrowing costs fell sharply. The weighted average onchain stablecoin borrow rate dropped 56.86% from 11.59% on Jan. 1 to 5% by May 26, attributed to lower market utilization and protocol parameter updates, according to the researcher’s analysis.

Publicly traded companies aggressively used debt to buy bitcoin (BTC), adding $2.1 billion in Q1. Strategy (formerly Microstrategy) issued $2 billion more debt, bringing its total debt for BTC purchases to $8.214 billion. Total observed debt for corporate bitcoin treasuries reached $12.703 billion by May 27, with Strategy holding 64.66% of that aggregate.

Futures open interest (OI) across major venues reached $115.97 billion by May 24, up 0.77% from Jan. 1. This followed a strong rebound from an April 8 low of $68.47 billion in OI. Perpetual futures open interest stood at $83.87 billion, with Binance leading at $25.18 billion (30.02% share). Hyperliquid saw explosive growth, increasing OI by a whopping 175.33% (+$5.73B) since Jan. 1 to capture a 10.73% market share.

The Chicago Mercantile Exchange (CME) also grew its share of total futures open interest to 24.63% by May 24, up 349 basis points since Jan. 1 Galaxy’s study explains, likely signaling increased institutional participation. Its share of ethereum futures open interest surged to 39.1%.

The Galaxy report indicates a clearly defined but shifting leverage trend, with reduced reliance on crypto-collateralized lending and growth in corporate debt strategies and institutional futures activity, while also noting potential interdependencies between these leverage sources.

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