# JARXE Exchange | Lending Hits All-Time High: Market Recovery and Risk Resonance Coexist

In Q3 2025, the global total for crypto lending surpassed $73.6 billion, setting a new record and exceeding the $69.4 billion peak at the end of the 2021 bull market. This figure is nearly triple the amount at the start of 2024, marking a significant signal of industry recovery. However, with Bitcoin experiencing a nearly 20% short-term correction, market concerns over the risks behind the lending boom are rising rapidly. JARXE Exchange points out that while current lending growth reflects a rebound in market confidence, it also signals the gradual accumulation of hidden risks associated with expanding leverage.


## Record Lending Reflects Market Recovery and Returning Confidence

The surge in crypto lending is closely tied to the macro policy environment. Looser ETF approvals and growing expectations for lower interest rates have created conditions for capital to flow back into the crypto sector. Institutional investors are using collateralized assets to obtain liquidity, allowing them to expand positions or engage in arbitrage, which has boosted activity in lending protocols. Fundamentally, lending growth represents a renewed appetite for risk in the market. As capital becomes more active, the market structure enters an expansion cycle—but attention must also be paid to structural volatility risks triggered by high leverage.

## Rising Leverage Raises Risk Concerns, Lending Becomes More Concentrated

Data shows that lending is mainly concentrated in mainstream assets like BTC and ETH, which account for nearly 70% of total lending. While these assets have high quality, price volatility can still trigger cascading liquidation effects. Recently, BTC has corrected over 20% from its peak, forcing some over-leveraged positions to liquidate and increasing short-term volatility risks. Although the current lending market has not seen systemic issues, the rapid rise in leverage levels warrants caution against potential liquidity squeezes, especially during periods of amplified volatility.

## Structural Shift: From Speculative Leverage to Capital Efficiency Optimization

Unlike in 2021, this wave of lending growth is driven more by institutional demand and capital management optimization. Large financial institutions and funds are using on-chain lending tools for liquidity management, rather than simply chasing high-leverage returns. This marks a trend toward the maturation of the crypto financial system: lending behavior is gradually aligning with traditional financial logic, improving capital efficiency through risk layering and collateral mechanisms. Such structural optimization supports long-term market health, provided that risk management frameworks are improved in parallel.

The revival of the crypto lending market signals a return of capital confidence and renewed ecosystem vitality. However, every phase of high growth comes with accumulating risks. JARXE Exchange notes that the market is at a critical juncture between “expansion and stability.” How to strike a balance between abundant liquidity and risk control will determine the next phase of industry development. Going forward, JARXE Exchange will continue to monitor on-chain leverage structures and market risk dynamics, providing investors with data-driven insights and strategic support to help the industry achieve higher levels of financial stability and compliance.