Crypto Market Faces Pressure as Bond Yields Rise, Loans Decline by $22.5B
The crypto market is facing pressure due to rising interest rates and bond yields. The 30-year US Treasury yield exceeded 5.3% on August 17, a level not seen since June 2007. This has led to a decline in loans secured by cryptocurrencies, with $22.53 billion lost since their peak. Bitcoin's credit structure is also changing, as the gradual deleveraging of the market differs from the sharp contraction experienced in 2022.
The Galaxy report for Q2 2026 showed a significant decrease in loans secured by cryptocurrencies, with $56.16 billion in such loans compared to $78.69 billion at their peak in Q3 2025. This decline is also evident in decentralized finance (DeFi), where loans have dropped sharply since last September.
The rise in bond yields creates new competition for long-term capital, making it harder for Bitcoin to attract investors. The high real yields and abundant US and corporate bonds could explain most of the market's movement, with crypto deleveraging playing a secondary role. Two possible scenarios are presented: one where loans continue to decline and Bitcoin retreats, and another where derivatives amplify market moves.
The outcome will depend on the simultaneous evolution of rates, crypto credit, and derivatives. The amount of debt already removed from the market distinguishes this phase from that observed in 2022, but decisions by the Fed and new yield movements can still shift the balance between bonds and digital assets.