{"id":91196,"date":"2025-08-18T06:12:13","date_gmt":"2025-08-18T06:12:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/91196\/"},"modified":"2025-08-18T06:12:13","modified_gmt":"2025-08-18T06:12:13","slug":"btcs-rising-leverage-trades-show-signs-of-stress-galaxy-digital-says","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/91196\/","title":{"rendered":"BTC’s Rising Leverage Trades Show Signs of Stress, Galaxy Digital Says"},"content":{"rendered":"

Good Morning, Asia. Here’s what’s making news in the markets:<\/p>\n

Welcome to Asia Morning Briefing, a daily summary of top stories during U.S. hours and an overview of market moves and analysis. For a detailed overview of U.S. markets, see CoinDesk’s Crypto Daybook Americas.<\/a><\/p>\n

Leverage in crypto markets is surging back to bull-market levels, even as last Thursday\u2019s pullback<\/a> reminded traders how quickly overextended bets can unwind.<\/p>\n

Galaxy Research\u2019s Q2 State of Crypto Leverage<\/a> shows crypto-collateralized loans expanded 27% last quarter to $53.1 billion, the highest since early 2022, powered by record demand in DeFi lending and a renewed appetite for risk.<\/p>\n

That backdrop set the stage for last week\u2019s shakeout. <\/p>\n

Bitcoin\u2019s retreat from $124,000 to as low as $118,000 triggered more than $1 billion in liquidations across crypto derivatives, the largest long wipeout since early August. Analysts framed it as healthy profit-taking<\/a> rather than the start of a reversal, but it underscored how fragile the market becomes when leverage builds this quickly.<\/p>\n

Galaxy’s analysts argue that stress points are already visible.<\/p>\n

In July, a wave of withdrawals on Aave pushed ETH borrowing rates above Ethereum\u2019s staking yields<\/a>, breaking the economics of the popular \u201clooping\u201d trade where staked ETH is used as collateral to borrow more ETH. The unwinding triggered a rush to exit staking positions, sending Ethereum\u2019s Beacon Chain exit queue to a record 13 days.<\/p>\n

Galaxy has also flagged that borrowing costs for USDC in the over-the-counter market have been climbing since July, even as on-chain lending rates remain flat.<\/p>\n

The spread between the two has widened to its highest level since late 2024. That disconnect suggests demand for dollars off-chain is outpacing liquidity onchain, creating a mismatch that could amplify volatility if conditions tighten further.<\/p>\n

With institutional demand and ETF inflows still supporting the bullish backdrop, strategists remain constructive on crypto.<\/p>\n

But between ballooning loan volumes, concentration of lending power, DeFi liquidity crunches, and a widening gap between on-chain and off-chain dollar markets, the system is showing more points of stress, Galaxy writes.<\/p>\n

Thursday\u2019s $1B flush was a warning that the return of leverage is cutting both ways.<\/p>\n

Market Movers<\/p>\n

BTC: Volatility has plunged across markets ahead of Jerome Powell\u2019s Jackson Hole speech, with traders betting on September rate cuts, but some warn complacency could mask risks as BTC trades at $118,061.51, up 0.44%.<\/p>\n

ETH: A record $3.8B in Ether is queued for unstaking with a 15-day wait, adding potential profit-taking pressure even as ETF and treasury demand surges, with ETH trading at $4,524.10, up 2.13%.<\/p>\n

Gold: Gold is trading at $3,332.95, down 0.11%, as hotter U.S. inflation data cut Fed rate-cut bets and left XAU\/USD consolidating above key $3,310 support ahead of Powell\u2019s Jackson Hole speech.<\/p>\n

Elsewhere in CryptoStablecoin Boom Has Made Crypto Ramps ‘Sexier’ M&A Targets, Says VanEck VC (Decrypt)Why Circle and Stripe (And Many Others) Are Launching Their Own Blockchains (CoinDesk)Gemini Hires Goldmans, Citi, Morgan Stanley and Cantor as Lead Bookrunners For its IPO (CoinDesk)<\/p>\n","protected":false},"excerpt":{"rendered":"Good Morning, Asia. Here’s what’s making news in the markets: Welcome to Asia Morning Briefing, a daily summary…\n","protected":false},"author":2,"featured_media":91197,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[28,62239,62240],"class_list":["post-91196","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-leverage","tag-leveraged-trading"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/91196","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=91196"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/91196\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/91197"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=91196"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=91196"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=91196"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}