Galaxy reports 40% drop in crypto lending from peak as market enters orderly deleveraging phase

The crypto lending market has shed more than $22 billion since its peak last year, and somehow that’s the good news. Galaxy Research’s Q2 2026 State of Crypto Leverage report puts total outstanding crypto-collateralized loans at $56.16 billion, down 40.13% from the $78.69 billion high watermark set in Q3 2025. The quarter-on-quarter decline alone was $11.33 billion, or 16.78%. That’s the steepest single-quarter drop of the current cycle, yet the mood across lending desks is closer to a controlled exhale than a fire alarm. Three quarters of shrinkage, zero quarters of chaos This is now the third consecutive quarterly decline in crypto lending volumes. The sequence has been remarkably measured: roughly 10%, then 5%, then 17%. Compare that cadence to the 2022 meltdown, when a single quarter erased more than 55% of outstanding loans. That episode brought down major lenders, triggered cascading liquidations, and left the industry picking shrapnel out of its balance sheets for years. The current contraction, by contrast, looks more like borrowers voluntarily paying down positions than scrambling for the exits. Galaxy Research characterized the environment as orderly, noting that lending ...