ChainCatcher news, according to Coindesk reports, Galaxy Research's report shows that the scale of crypto market loans grew by 27% in Q2, reaching $53.1 billion, the highest level since early 2022, mainly driven by demand for DeFi lending and a rebound in risk appetite. Bitcoin fell from $124,000 to $118,000, triggering over $1 billion in liquidations in the crypto derivatives market, the largest scale of long liquidations since early August. Analysts believe this is more like a healthy profit-taking rather than the beginning of a reversal, but it also highlights the market's fragility when leverage accumulates quickly.
Galaxy analysts pointed out that pressure points have begun to emerge. In July, Aave experienced a large number of withdrawals, driving ETH lending rates above Ethereum staking yields, breaking the 'circular arbitrage' trading logic—using staked ETH as collateral to borrow more ETH. This deleveraging process triggered a run on staking positions, causing the exit queue for the Ethereum beacon chain to set a historical record of 13 days.
Galaxy stated that since July, the borrowing cost for USDC in the over-the-counter market has been continuously rising, while on-chain lending rates have remained stable. The spread between the two has expanded to the highest level since the end of 2024. This divergence indicates that off-chain demand for dollars has exceeded on-chain liquidity, which could exacerbate volatility if the market environment tightens further. With a surge in loan scale, concentrated lending power, tightening DeFi liquidity, and an expanding gap between on-chain and off-chain dollar markets, the system is showing more pressure points. The $1 billion liquidation on Thursday serves as a reminder that the effects of leverage are two-way.
