Crypto Credit Remains Resilient Despite Macro-Driven Market Volatility

In this report:

1. Strategy's Bitcoin 'Digital Credit' Decumulates the Treasury It Claims to Monetize

2. Institutional Capital Deepens in Onchain Credit as the Collateral Base Grows

July Lending Market Update

Crypto extended its decline through June before steadying into July, with the weakness driven more by macro pressure and flows than by a breakdown in crypto credit itself. Bitcoin fell 20.1% in the month to close June at ~$58,700, its lowest level since 2024 and down ~53% from its October 2025 peak of ~$126,200, capping its worst first half since 2022. Unlike 2022, when the drawdown was driven by contagion and forced deleveraging following Terra/Luna and FTX, this move was macro and flow led. Inflation rose to a three-year high of 4.2% in May, driven in part by the Iran-related energy shock, capital continued rotating out of crypto into AI-linked equities, and at the June 17 FOMC the Fed held rates at 3.50-3.75% while the median 2026 policy-rate projection rose to 3.8% from 3.4% in March, reinforcing a more hawkish policy backdrop under new Chair Warsh. Against that backdrop, U.S.-listed spot Bitcoin ETFs recorded their largest monthly outflow on record at ~$4.5Bn.

Lending markets held up through the selloff. No major lender, fund, or exchange failed, so there were none of the forced collateral sales or liquidation cascades that defined past credit-stress episodes. Even as ETFs sold, large holders absorbed a meaningful share of supply, adding more than 270,000 BTC, or ~$16.7Bn, over the back half of June. DeFi lending remained orderly, with category Total Value Locked (TVL) holding at ~$39.9Bn, Aave retaining one-third of market share, and Aave V3 Ethereum USDC and USDT supply rates at 3.25% and 2.73%, respectively. Stablecoin supply declined to ~$312Bn, its first monthly contraction in five months, though exchange volumes rose. Into July, prices steadied as Bitcoin retook $63,000 after Warsh noted easing inflation risks and the June jobs report came in soft.

Key trends

001
Strategy's Bitcoin 'Digital Credit' Decumulates the Treasury It Claims to Monetize

Strategy (MSTR) runs five perpetual preferred instruments, four Nasdaq-listed (STRF, STRC, STRK, STRD) and one euro-denominated series listed in Luxembourg (STRE). Michael Saylor markets the suite as "digital credit," framing it as a Bitcoin income market layered on top of the company's ~843k BTC treasury. The framing is deliberate, but the legal reality matters: all five are perpetual preferred equity, not debt. That includes STRK, whose distinguishing feature is an optional conversion into MSTR common (10:1), not a debt claim. None of the series has a maturity, none is secured by pledged BTC, and dividends are discretionary, payable only when and if the board declares them.

The engine originally ran on premium: when MSTR traded well above the BTC-per-share it backed (high mNAV, market-to-net asset-value), Strategy issued equity through the ATM and converted that premium into incremental BTC accretively. That loop is now breaking down. As spot ETFs democratized direct BTC exposure, the scarcity premium compressed and mNAV has fallen to a negligible premium (~1.07x) after dipping to parity (0.99x), the level where common issuance stops being accretive.

The strain now shows in the preferreds, which have traded below par. STRC, the variable-rate series engineered to hold $100, fell to about $89 in mid-June and into the $70s by month-end, and on June 29 Strategy raised its dividend to 12% while noting the rate would not necessarily rise simply because the shares traded below par.

This matters for two reasons. The first is dividend coverage. Preferred obligations run to roughly $1.73Bn a year against a treasury that produces no operating cash flow, so payments increasingly depend on raising capital or selling BTC. Strategy has begun the latter, selling 3,588 BTC for ~$216MM between June 29 and July 5 to fund dividends while replenishing its USD reserve to ~$2.55Bn under a new $1.25Bn Monetization Program. The second is path dependency. Because dividends fall due on fixed dates regardless of price, the timing of BTC's returns, not just the average, determines whether the treasury holds or shrinks. A prolonged early drawdown forces selling into weakness, shrinking the BTC base even if bitcoin later clears its long-run average.

In our view, none of this makes a hard default likely. Strategy's preferred dividends are discretionary rather than contractual, and STRC's rate is adjustable, so the obligations can flex with conditions.

002
Institutional Capital Deepens in Onchain Credit as the Collateral Base Grows

Even as spot Bitcoin ETFs posted record June outflows and Strategy disclosed BTC sales, institutional engagement with onchain lending moved the other way. Standard Chartered initiated coverage on Aave and Morpho, framing Aave as an automated, blockchain-based bank and Morpho as lending and infrastructure for onchain banks and asset managers. The category is large enough to justify the attention, with DeFi lending TVL at ~$39.9Bn and Aave and Morpho holding a combined 53.1% share ($13.9Bn and $7.3Bn). Morpho raised $175MM in June, and Kraken entered talks for a 15% stake in Aave at a $385MM valuation. The two are increasingly evaluated on credit-market fundamentals including supplied assets, active borrows, revenue quality, and value capture.

Traditional finance continued moving into the same infrastructure. Ethena said its synthetic dollar USDe will be integrated into BlackRock’s Aladdin, the risk platform used by banks, insurers, and asset managers overseeing more than $20T, with BlackRock’s tokenized Treasury fund BUIDL serving as the primary reserve for a forthcoming Ethena white-label product, alongside a $100MM facility that lets eligible BUIDL holders move between the fund and stablecoins outside market hours. The announcement followed other asset-manager activities including a Janus Henderson investment and Coinbase Ventures backing, with ENA up ~8%.

The collateral base underneath all of this also reached new highs. Tokenized real-world assets hit a record $30.1Bn in actively circulating value, led by $17.0Bn of tokenized Treasuries, while tokenized equities jumped 145% to a record $3.86Bn, catalyzed by tokenized SpaceX trading at $1.19Bn. The growth in tokenized Treasuries widens the base of high-quality collateral that lending desks can use across lending, repo, and structured credit.

The caveat is that collateral quality still matters. June saw three stablecoins lose their peg, each for different reasons. apxUSD, backed primarily by Strategy's STRC preferred shares, slipped to $0.90-$0.93 on June 4 as STRC fell below $80 and dragged down the protocol's reserves. MIM broke its peg on June 8 and slid to $0.50 by June 24 as liquidations drained DEX liquidity, and msUSD collapsed about 71% to $0.29 on June 20 after its proof-of-reserves provider terminated service. These were idiosyncratic failures, not core-market stress, but they are a reminder that collateral selection matters as the onchain base expands.

Notable News:

• Galaxy blends Aave, Morpho and other DeFi rates in new GOFR crypto borrowing product

• Galaxy Simplifies DeFi Borrowing For Institutions With New Onchain Credit Platform

• Galaxy targets institutional stablecoin yield with new DeFi vaults

• Grove and Galaxy Digital Announce $500 Million Warehouse Lending Facility | Grove Protocol

• Kraken eyes 15% stake in DeFi lender Aave in deal valuing protocol at $385 million

• BlackRock's Aladdin platform adds deeper support for Ethena's stablecoin products | The Block

• SpaceX IPO Drives Tokenized Equity Volumes to Record as Stablecoin Market Cap Falls

• Ethena (ENA) lands Janus Henderson investment in token, USDe distribution

• Yield Farming Rankings - Best DeFi APY Pools - DefiLlama