Global private credit market stress prompts asset manager restrictions, impacting investment firms and crypto markets.
Credit Market Stress and Its Implications
Cracks in the global private credit market have sent shockwaves through investment circles, prompting concerns that the resulting stress could extend to crypto markets. According to Bloomberg, BlackRock, one of the world's largest asset managers, has implemented restrictions on withdrawals from its $26 billion private credit fund due to rising redemption requests. This development follows similar stress reported at Blue Owl, which sold $1.4 billion in loans to meet withdrawal demands and reportedly has exposure to a U.K. property lender that has collapsed.
Investor Reactions and Market Woes
The news sent shockwaves through the financial community, with shares of major asset managers including BlackRock (BLK), Apollo Global Management (APO), Ares Management (ARES), and KKR experiencing a significant drop, with each company’s share price falling by 4%-6%. This comes as the firms have been grappling with a broader sell-off in the market since 2026.
Credit Stress and the Banking Sector
Credit stress in private credit funds could have far-reaching consequences, potentially leading to a broader deleveraging event that could impact the banking sector. Andreja Cobeljic, head of derivatives trading at Swiss crypto bank AMINA Bank, warned in an email note that if redemption pressure forces private credit funds to unwind their positions, it could trigger a broader deleveraging event. This would not only affect traditional credit markets but could also ripple through digital assets, including cryptocurrencies like Bitcoin (BTC), which currently trades at $68,241.45.
Contagion to Tokenized Asset Markets
The risk of credit stress extending to tokenized asset markets is another significant concern. Tokenized private credit products—loans and funds that are packaged and issued on public blockchains as tokens—have grown rapidly as part of the broader real-world asset (RWA) trend. According to data from rwa.xyz, the on-chain private credit market now stands at just under $5 billion. While this figure is small compared to the roughly $3.5 trillion global private credit market in 2025 (as estimated by the Alternative Credit Council), the growing presence of these assets inside decentralized finance (DeFi) means that stress in the underlying loans could directly impact crypto markets.
Risks in Real-World Credit Products
Teddy Pornprinya, co-founder of real-world asset protocol Plume, highlighted the complex risks associated with real-world credit products, particularly for crypto investors. These products often carry volatile net asset value swings and headline yields that do not fully reflect fees or credit risk. A recent example illustrates how off-chain credit stress can spill into DeFi. In 2025, the bankruptcy of auto-parts supplier First Brands Group affected a private credit strategy run by Fasanara Capital. A tokenized version of the strategy, mF-ONE, had been issued on the Midas RWA platform and used as collateral for borrowing on the Morpho protocol. When the underlying fund marked down exposure tied to the bankruptcy, the token’s net asset value slipped by about 2%, pushing highly leveraged borrowers close to liquidation and tightening liquidity on the platform. Despite lenders ultimately avoiding losses, the episode underscores the potential for traditional credit stress to transmit into on-chain markets through tokenized private credit strategies.
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