The Silent Private Credit Crisis: Between Morpho and the Coming Collapses

Cracks in the global private credit architecture are widening, creating a shockwave that could spill over into digital asset markets and decentralized finance. By early 2026, the sector has begun showing signs of significant stress, threatening not only institutional investors but also participants in the cryptocurrency ecosystem.

Warning Signs: When Private Credit Giants Falter

BlackRock’s private credit fund, with $26 billion, recently restricted redemption requests amid a surge in withdrawal demands. This decision follows similar pressure on Blue Owl, which had to liquidate $1.4 billion of its portfolio last month to meet investor withdrawals. Blue Owl is also reportedly exposed to a British real estate lender in bankruptcy, further complicating its situation.

These moves triggered an immediate reaction in stock markets. Major asset managers—BlackRock (BLK), Apollo Global Management (APO), Ares Management (ARES), and KKR—saw their shares decline by 4 to 6% in a single session, extending a downward trend that has persisted since the start of the year.

The Invisible Threat: From Private Credit to Digital Assets

Experts warn that if this redemption pressure forces fund managers to unwind their positions en masse, broader deleveraging could spread across all asset classes. Andreja Cobeljic, head of derivatives trading at AMINA Bank, emphasizes that this dynamic risks directly impacting the crypto sector. Bitcoin, currently valued at $70,990, could experience a significant secondary shock not fully reflected in current prices.

This threat is especially real given that U.S. banks have extended nearly $300 billion in loans to private credit providers by mid-2025, with an additional $285 billion channeled into private equity funds. The growing interconnectedness between traditional banking and private credit creates substantial systemic risks.

The Invisible Channel: When Private Credit Becomes Tokenized

A less visible but potentially devastating risk is emerging directly on public blockchains. Tokenized private credit products—loans and investment strategies issued as tokens on blockchains—are rapidly expanding in the wake of the real-world assets (RWA) trend.

The on-chain private credit market now totals around $5 billion, according to rwa.xyz. While this figure remains tiny compared to the estimated $3.5 trillion global private credit market by the Alternative Credit Council, the increasing presence of these assets in decentralized finance protocols means off-chain credit disruptions can directly transmit to crypto markets. “Institutions are rushing into crypto, often with products that even native DeFi participants don’t fully understand,” notes Teddy Pornprinya, co-founder of the RWA protocol Plume.

Morpho, Bleu, and Risk Loopholes

The DeFi ecosystem increasingly relies on protocols like Morpho to facilitate borrowing and lending of assets, including these new tokenized private credit products. A case in point shows how traditional credit stress can contaminate this universe. The bankruptcy of First Brands Group in 2025 affected a private credit strategy managed by Fasanara Capital. The tokenized version of this strategy, mF-ONE, was issued on the Midas RWA platform and served as collateral for borrowing on the Morpho protocol.

When the underlying fund revalued downward following the bankruptcy, the token’s net asset value dropped by about 2%. This decline brought leveraged borrowers closer to forced liquidation, tightening liquidity on Morpho and demonstrating how off-chain credit stress can efficiently transmit to on-chain markets.

Lenders ultimately avoided material losses, but this episode revealed a little-known risk transmission mechanism: tokenized private credit products used as collateral in DeFi protocols can turn traditional credit disruptions into decentralized crises.

What Investors Should Expect

As Andreja Cobeljic warns, “In isolation, this would be manageable. But emerging amid a broader global deleveraging, coupled with energy shocks and collapsing interest rate expectations, it’s a whole different story.” For high-risk assets like cryptocurrencies, disorderly private credit unwinding could trigger a secondary shock that current prices do not fully reflect.