Growing pressure in the global private credit market is beginning to worry investors, with analysts cautioning that instability in the sector could spill over into cryptocurrency markets through both broader financial contagion and blockchain-based credit products.
A report from Bloomberg said BlackRock has started restricting withdrawals from its $26 billion private credit fund as redemption requests increase. The development follows similar strains at Blue Owl Capital, which reportedly sold around $1.4 billion in loans last month to meet investor withdrawals and has exposure to a failed U.K. property lender.
The developments have weighed on shares of major alternative asset managers. BlackRock, Apollo Global Management, Ares Management and KKR all declined between 4% and 6% on Friday, extending the sector’s losses this year.
If redemption pressure continues to build, private credit funds may be forced to unwind positions, potentially triggering broader deleveraging across financial markets. Such a scenario could also affect digital assets including Bitcoin, according to Andreja Cobeljic, head of derivatives trading at AMINA Bank.
Credit stress collides with macro headwinds
Cobeljic noted that U.S. banks had extended nearly $300 billion in loans to private credit providers by mid-2025, along with another $285 billion in lending to private equity firms. That level of exposure raises the possibility that problems in private credit could spill into the broader banking system.
“In isolation this would likely be manageable,” Cobeljic said. “But when it appears in the middle of a broader global deleveraging cycle — alongside an energy shock and fading expectations for interest-rate cuts — it becomes a much bigger issue.”
In that environment, a disorderly unwind in private credit could create a significant second-order shock for risk assets, including cryptocurrencies, that current market pricing may not yet reflect.
Tokenized credit creates new channels of risk
Another potential transmission channel lies in the fast-growing market for tokenized private credit — traditional loans packaged as blockchain-based tokens and integrated into decentralized finance platforms.
Data from rwa.xyz shows the on-chain private credit market has expanded to nearly $5 billion. While that remains small compared with the roughly $3.5 trillion global private credit market estimated for 2025 by the Alternative Credit Council, the increasing presence of these assets within DeFi ecosystems could allow credit stress to spread directly into crypto markets.
“Institutional investors are entering crypto through products that even many DeFi participants may not fully understand,” said Teddy Pornprinya, co-founder of the real-world asset protocol Plume.
He noted that real-world credit products can carry risks that may not be obvious to crypto investors, including sudden swings in net asset value and yields that may not fully reflect fees or underlying credit exposure.
A recent case illustrates how off-chain credit stress can impact on-chain markets. According to research from Chaos Labs, the 2025 bankruptcy of auto-parts manufacturer First Brands Group affected a private credit strategy managed by Fasanara Capital.
A tokenized version of that strategy, known as mF-ONE, had been issued on the Midas real-world asset platform and used as collateral for borrowing on the Morpho DeFi protocol.
When the underlying fund marked down its exposure following the bankruptcy, the token’s net asset value dropped by about 2%. The decline pushed heavily leveraged borrowers closer to liquidation and tightened liquidity on the platform.
Although lenders ultimately avoided losses, the episode highlighted how tokenized private credit used as collateral in DeFi can transmit traditional credit stress directly into blockchain-based financial markets.
