Concerns are mounting in the financial sector as BlackRock’s $26 billion private credit fund has begun limiting withdrawals due to increased redemption requests. This decision follows similar challenges faced by other firms, including Blue Owl, which recently sold off $1.4 billion in loans to manage its own withdrawal pressures.
As major asset managers like BlackRock, Apollo Global Management, Ares Management, and KKR experienced declines of 4% to 6% in their share prices, analysts are warning that the stress in the private credit market could have broader implications for digital assets. Andreja Cobeljic, head of derivatives trading at AMINA Bank, indicated that if private credit funds are forced to liquidate their positions, it could lead to significant deleveraging across various asset classes, including cryptocurrencies such as Bitcoin.
Cobeljic noted that U.S. banks had extended nearly $300 billion in loans to private credit providers and an additional $285 billion to private equity funds as of mid-2025. He cautioned that while these issues might be manageable in isolation, they are occurring amid a larger global deleveraging event, compounded by an energy crisis and shifting market expectations regarding interest rates.
The potential for contagion extends to tokenized asset markets as well. The rise of tokenized private credit products—loans and funds issued on public blockchains—has become part of the growing trend of real-world assets (RWA). Although the on-chain private credit market is valued at just under $5 billion, it is dwarfed by the estimated $3.5 trillion global private credit market. The integration of these tokenized assets into decentralized finance (DeFi) poses risks, as stress in traditional credit markets can directly impact crypto markets.
Teddy Pornprinya, co-founder of the real-world asset protocol Plume, emphasized that while institutions are increasingly entering the crypto space, they often do so with complex products that may not be fully understood even by seasoned investors. He pointed out that real-world credit products entail risks that can lead to volatile asset valuations and misleading yields.
A recent incident illustrated the potential risks associated with off-chain credit stress affecting DeFi. The bankruptcy of auto-parts supplier First Brands Group in 2025 impacted a private credit strategy managed by Fasanara Capital. A tokenized version of this strategy, known as mF-ONE, was issued on the Midas RWA platform and used as collateral in the Morpho protocol. When the underlying fund adjusted its valuation due to the bankruptcy, the token’s net asset value dropped by approximately 2%, nearly triggering liquidations for highly leveraged borrowers and tightening liquidity on the platform. Although lenders avoided losses, this episode underscored how traditional credit issues can spill over into on-chain markets.
BlackRock's private credit fund is limiting withdrawals amid rising redemption requests, raising concerns about potential impacts on the crypto market. Analysts warn that stress in the private credit sector could lead to broader deleveraging, affecting digital assets directly linked to traditional credit markets.
Source: Bloomberg