BlackRock's $26 billion HPS Corporate Lending Fund (HLEND) has capped investor withdrawals at 5% after receiving redemption requests for $1.2 billion, or 9.3% of its net asset value, in the first quarter. The firm paid out $620 million, hitting its contractual limit, and restricted further withdrawals for the period. This move triggered a roughly 5% drop in BlackRock's (BLK) stock on Friday, with the selloff spreading to rival asset managers including Blue Owl, KKR, Carlyle, Apollo, Ares, and TPG, which each fell 5–6%.
The event is part of a broader wave of stress in the private credit sector. Earlier in the week, Blackstone raised its standard redemption cap from 5% to 7% and injected $400 million to meet all requests. Blue Owl has also drawn attention for replacing client redemptions with promised future payouts instead of cash. BlackRock framed its cap as a planned feature to prevent a structural mismatch between investor capital and the illiquid, long-term nature of private credit loans, stating that preserving capital was "in the best interest of the fund as a whole."
Analysts warn this stress could spill over into cryptocurrency markets through two primary channels. First, if redemption pressure forces private credit funds to unwind positions, it could trigger broader deleveraging across asset classes, impacting risk assets like Bitcoin. Andreja Cobeljic of AMINA Bank noted that emerging credit stress, combined with an energy shock and collapsing rate-cut expectations, could represent a "significant second-order shock" for crypto that current pricing does not reflect.
The second channel is more direct, via the growing tokenized private credit market within decentralized finance (DeFi). The on-chain private credit market is valued at just under $5 billion, and stress in the underlying loans can ripple directly into crypto. A 2025 incident involving the bankruptcy of auto-parts supplier First Brands Group showed how a tokenized private credit strategy (mF-ONE) used as collateral on Morpho protocol faced near-liquidation events when its net asset value slipped, highlighting the transmission risk of traditional credit stress into on-chain markets.
