Every crypto holder eventually faces the same choice when cash is needed: sell assets or borrow against them. Selling may trigger taxable events and forfeit upside, while borrowing allows long-term holders to stay exposed to their crypto. According to Nexo’s Future of Digital Wealth 2026 report, two in three affluent investors hold crypto, and Bitcoin long-term holder supply rose from 12.8 million BTC in early 2021 to 16.4 million BTC by October 2026.
This expanding base of long-term holders is a growing addressable market for crypto-backed credit. Meanwhile, Bitcoin annualized realized volatility fell from 81% in 2021 to 42% in 2025, allowing lenders such as Nexo to offer lower rates and higher loan-to-value ratios. The crypto-backed lending market recovered from $18.6 billion at the end of 2022 to $78.6 billion by Q3 2025, then deleveraged gradually to $56 billion by Q2 2026 — a 29% drop that resembles an ordinary credit cycle rather than the 2022 collapse.
Nexo held $1.72 billion in open loans in Q2 2026, a 7.5% share of the CeFi market and the largest CeFi lender that individual holders can borrow from directly. Its Credit Line accepts BTC, ETH and more than 100 other assets as collateral, with maximum LTVs of 50% for BTC and ETH and 90% for USDT and USDC, and rates starting at 0.9% annually.
Separately, a Banque de France working paper published November 9 found that surprise Fed tightening can push DeFi yields lower, particularly on Aave stablecoin pools. The authors tracked USDC, USDT and DAI on Aave from January 2021 to January 2026 and found that deposit rates drop on impact after surprise tightening because borrowing shrinks faster than supply. In response to a 25-basis-point Fed surprise, total borrowing and supply fell around 10% at their peak four to five months later. Aave deposit rates then drift back toward levels the authors cannot statistically separate from zero.
The mechanism: Aave yields are shares of what borrowers pay, mostly for leveraged bets on bitcoin and ether. When Treasury yields rise, some suppliers withdraw stablecoins, but the broader reaction is deleveraging by borrowers, pushing utilization and deposit rates down. The research also found the gap between Aave deposit rates and SOFR had a half-life of about five weeks for DAI, four for USDC and just over two for USDT.
