The chain collapse in the private credit market may spread to the cryptocurrency market at a faster pace than expected.

The news that BlackRock’s $26 billion private credit fund has begun restrictions on withdrawals is not just a problem for a single company, but a signal of broader financial stress. Coming after last month’s move by Blue Owl to sell $1.4 billion in loans, market tension is increasing.

What’s interesting is that this issue could be directly tied to the on-chain market. Tokenized private credit products—loans and funds issued as real-world assets (RWA)—are growing rapidly on the blockchain. The current on-chain private credit market is about $5 billion, but the fact that this is increasing within decentralized finance (DeFi) implies the risk that traditional financial stress could directly spill over into the crypto asset market.

Andrey Kobeljic, head of derivatives trading at Swiss crypto bank AMINA Bank, warns that if private credit funds are forced to unwind their positions, they could trigger broader deleveraging that may spread across digital assets as a whole, including Bitcoin. Taken on its own it may be manageable, but what makes it troublesome is that it coincides with ongoing global deleveraging, an energy shock, and the collapse of expectations for interest rate cuts.

There are real-world examples as well. In 2025, when an auto parts supplier went bankrupt, it spread to Fasanara Capital’s private credit strategy, causing the net asset value of its tokenized version, mf-ONE, to drop by about 2%. Because it was used as collateral on the Morpho protocol, highly leveraged borrowers were pushed to the brink of liquidation, tightening liquidity across the entire platform.

Major asset management firms’ stock prices are also coming under pressure. Shares of BlackRock, Apollo Global Management, Ares Management, and KKR fell 4–6% on Friday, and the downward trend has continued.

As institutional investors enter the crypto market, many investors may not fully understand the complex risks associated with real-world credit products—especially the fluctuations in net asset value and the gap between the apparent yield and the actual credit risk. Following this line of reasoning reveals a mechanism in which off-chain credit stress can spill over into the on-chain market through DeFi protocols.

If this stress is not fully reflected in current crypto prices, there could be room for an unexpected correction. Market participants should pay even closer attention to developments in the private credit market.