The cryptocurrency lending market has experienced a sharp decline of 43% since its peak in 2021, dropping from $64.4 billion to $36.5 billion by the end of the fourth quarter of 2024, according to a report by Galaxy Digital.

This decline is attributed to the bankruptcy of several prominent centralized finance (CeFi) platforms such as Genesis, Celsius, and BlockFi, due to falling cryptocurrency prices, which led to a significant decrease in the supply and demand for crypto loans.

In contrast, decentralized finance (DeFi) recorded a strong recovery, with the open borrowing volume rising from $1.8 billion in late 2022 to $19.1 billion by the end of 2024, an increase of 959%. This is due to the continued operation of DeFi platforms thanks to their decentralized nature, at a time when many CeFi platforms ceased operations.

The report noted that the lending market structure is undergoing a fundamental shift, with a shrinking role of centralized institutions in favor of decentralized platforms, which continue to expand and grow despite market volatility.