Galaxy Research: Q2 Crypto Lending Market Shrinks 16.8% QoQ, Deleveraging ‘Orderly and Mild’

The distinction between a shrinking credit book and a disorderly one is the whole story here. A 16.8% quarterly contraction would normally read as stress, but Galaxy's framing suggests collateral and counterparty behavior held up, pointing to voluntary retrenchment rather than forced liquidation. That matters most for desks and protocols that depend on lending revenue, since a smaller market with stable mechanics is a different problem than a smaller market with broken plumbing. The open question is whether this pullback reflects seasonal caution or a longer reset in crypto credit demand.