This environment also weighs on bitcoin. Investors can secure real returns that reflect inflation through U.S. Treasuries, while bitcoin does not pay interest simply for holding it. The longer long-term yields stay high, the greater the burden on bitcoin to compete with U.S. Treasuries to attract long-term investment funds.
The size of collateralised lending in the crypto market has fallen sharply from the previous peak. Galaxy put crypto collateralised lending at $56.16 billion as of the second quarter of 2026. That was down $11.33 billion from the previous quarter and $22.53 billion below the peak of $78.69 billion in the third quarter of 2025.
Borrowing on DeFi lending apps also fell more than 53 percent to $21.94 billion as of July 21 from $47.13 billion in September last year. Total crypto-related debt fell for a third straight quarter.
Still, the current contraction differs from 2022. In 2022, crypto collateralised lending fell more than 55 percent in a single quarter and then declined 9 percent and 29 percent in the following two quarters. The declines over the past three quarters were about 10 percent, 5 percent and 17 percent, relatively mild. Galaxy judged this as gradual de-risking.
Derivatives exposure, however, is rising again. Total futures open interest was $103.2 billion at the end of the second quarter and rose to about $114 billion at the end of July, up nearly $11 billion in a month. Bitcoin futures open interest also fell to about $45 billion during the quarter but recovered to around $48 billion. Galaxy said open interest does not directly mean leverage, adding some positions may be hedges against spot holdings. Even so, it said it was clear that market structure is changing.
A key point is where bitcoin weakness begins. If bitcoin weakens but the decline in collateralised lending remains gradual as it has been, this sell-off is likely driven by macro factors led by high real rates and large-scale supply of Treasuries and corporate bonds. If, instead, the contraction in collateralised lending suddenly steepens and futures open interest also collapses sharply, it would resemble the credit-driven chain liquidations of the previous cycle.
An upside scenario was also presented. If the 30-year yield falls below 5.1 percent or real yields ease from current peaks, bitcoin could have room to try the $67,000 to $72,000 range again. That would assume futures open interest stays broadly stable and collateralised lending does not expand aggressively again.
If the 30-year yield rises further to the 5.4 to 5.7 percent range and real yields stay high, bitcoin could be pushed below $60,000 toward the $52,000 to $58,000 range. Even if futures open interest drops sharply and liquidations increase, if collateralised lending continues to decline gradually as it has been, it could be read as a macro-driven downturn different from the 2022-style collapse of lenders.
Ultimately, this phase is a test of whether bitcoin can hold up in a long-term interest rate environment it has never faced before. With a $22.5 billion credit contraction already under way, the remaining variables hinge on whether rate pressure in the bond market intensifies further or whether leverage within crypto is shaken again.
