Tariffs, Turbulence, and Resilience: BTC Navigates April’s Geopolitical Shock
This post is part of Galaxy Lending’s Monthly Market Commentary, offering insights into trends shaping the crypto credit and lending landscape. Subscribe to receive this commentary and more directly to your inbox.
In this report:
On-Chain Lending Surges as Institutions Embrace DeFi Credit Infrastructure
Stablecoin Leverage Rebounds on Aave V3 Amid Growing Risk Appetite
$OM Token Crash: A Case Study in Leverage Risk and Market Fragility
Market Update
April began with Bitcoin (BTC) around $85,000 but quickly dropped below $75,000 after President Trump announced aggressive tariffs under his “Liberation Day” plan, including a proposed 145% tariff on Chinese imports. The geopolitical shock sent risk assets tumbling, and BTC followed suit. A fake report of a 90-day tariff delay sparked a brief Nasdaq rally, but markets only stabilized after a real pause was announced mid-month. BTC rebounded, closing April above $95,000 as fears of immediate trade escalation eased.
Despite macro uncertainty, BTC short-term funding remained stable. The 3-month annualized basis hovered around 5–7%, and funding rates stayed modestly positive, reflecting continued demand for leverage. CME futures maintained a healthy premium to spot, supporting delta-neutral strategies where traders captured basis spreads by buying spot and shorting futures.
Institutional flows were strong, with U.S. spot BTC ETFs seeing 29,800 BTC in net inflows during the week of April 21—the largest since November 2024. These flows helped support BTC’s recovery and signaled persistent institutional appetite.
Key Trends:
001
On-Chain Lending Surges as Institutions Embrace DeFi Credit Infrastructure
On-chain lending continues its rapid evolution as institutional players and DeFi protocols converge. Coinbase has expanded its Bitcoin-backed USDC loan program, raising the borrowing limit from $100,000 to $1 million after originating $130 million in loans year-to-date—highlighting rising demand for crypto-collateralized credit.
Bitcoin-backed loans are now fully rolled out to all US users (ex. NY). You can instantly borrow up to $1M in USDC on Coinbase. ↓ pic.twitter.com/zvZkxSaKHO
At the same time, institutional credit strategies are entering DeFi. A tokenized Apollo fund, structured around private credit assets, has launched on-chain via Securitize. The fund employs a CLO-style approach with a levered stablecoin strategy, risk-managed by Gauntlet, and is deployed through Morpho vaults. These positions are looped into Morpho’s lending markets, increasing protocol value and enabling higher yields for token holders. This integration marks a significant milestone in bridging traditional finance with decentralized lending, unlocking new yield dynamics for on-chain participants.
Institutional-grade DeFi strategies, powered by Morpho.
The newly launched levered RWA strategy on Apollo Diversified Credit Securitize Fund (ACRED) offers enhanced yields to institutional investors and is available exclusively onchain. pic.twitter.com/mEhhRSAIKA
002
Stablecoin Leverage Rebounds on Aave V3 Amid Growing Risk Appetite
On Aave V3 (Ethereum), USDT borrowing demand started April at $2 billion, dipped to $1.8 billion early in the month, then rebounded sharply to $2.3 billion by month-end. Meanwhile, USDT supply saw a series of ups and downs throughout the month, ultimately ending higher. These swings suggest reactive liquidity provisioning as traders adjusted to market conditions in real time.
Despite the volatility, utilization rates remained strong, peaking above 83% on April 21. This reflects renewed appetite for leverage as participants repositioned around macro headlines and token-specific catalysts. On-chain interest rates—widely viewed as a barometer of risk appetite—ranged from 3.5% to 5.5%. While not high by historical standards, they were supported by strong utilization and signaled that cash remains relatively cheap. Traders appeared comfortable deploying borrowed stablecoins into yield or directional strategies, taking advantage of low funding costs and ample liquidity.
003
$OM Token Crash: A Case Study in Leverage Risk and Market Fragility
One of the most dramatic events in April 2025 was the sudden collapse of the $OM token, marking a key trend in altcoin risk management and leverage dynamics. On April 13, $OM’s funding rate plunged to an extreme -2,650.83%, triggering a rapid unwinding of positions. The token’s price crashed from $6.3 to $0.4 within a single day, and open interest on Binance collapsed from $137 million to just $20 million.
This was driven by an overbuilt long position which, once momentum turned, sparked a massive liquidation cascade. The event exposed the dangers of excessive leverage and liquidity mismatches—especially when large holders use tokens as collateral on centralized exchanges. MANTRA's response included a commitment to burn 300 million $OM tokens and a call for industry-wide reforms in liquidation policy, making the episode a stark reminder of the structural fragility in altcoin markets.
More from Galaxy Lending:
The State of Crypto Lending Report: Galaxy Research dives deep into the evolution of crypto credit markets post-2022. From the rise of new lenders to the role of staking and real-world assets, this comprehensive report unpacks where the market stands—and where it’s headed.
The State of Crypto Lending w/ Max Bareiss: Alex Thorn talks with Max Bareiss (Galaxy Lending) about the state of the bitcoin and crypto lending market.
Notable News:
Tokenized Apollo Credit Fund Makes DeFi Debut With Levered-Yield Strategy by Securitize, Gauntlet
Tether, Galaxy, Ledn Lead Centralized Crypto Lending’s $37B Market
Fed holds rates, cites increased risk of setbacks in the labor market, inflation
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