The State of Crypto Leverage – Q2 2026: An Orderly, Measured Decline

Introduction

Q2 was the first quarter since Q4 2022 in which onchain lending declined across every category (CeFi, DeFi, and the crypto-collateralized portion of collateral debt position stablecoins), as the market’s deleveraging trend continued. The notable difference between current conditions and those of the previous bear cycle is outstanding loans are falling in a steady, stepwise decline rather than in outright collapse. In Q2 2022, the crypto-backed lending sector caved by more than 55% before experiencing additional 9% and 29% declines in Q3 and Q4 2022, respectively. Compare that to the recent deleveraging cycle where the market has seen three consecutive quarters of just 10%, 5%, and 17% declines. This measured pace points to a much healthier deleveraging cycle, driven by gradual risk reduction rather than forced liquidations or counterparty failures, in our view. Should lending activity continue to contract in the coming quarters, we'd expect it to follow this same stepwise pattern rather than the sharp, cascading losses that defined the 2022 unwind.

On the corporate treasury front, we saw some deleveraging driven primarily by a May 2026 debt repurchase of $1.5 billion by Strategy. This took the amount of debt used to supplement digital asset treasury strategies down to $16.1 billion, which is the approximate level of debt taken on by these companies in July 2025.