Crypto Borrowing Shifts as DeFi Contracts and CeFi Activity Rebounds: CryptoQuant

Core Insights - Crypto borrowing activity is shifting significantly as DeFi contracts decline during the current market correction, while CeFi shows early signs of recovery [1] DeFi Borrowing Contracts as Risk Appetite Fades - Decentralized borrowing has decreased in line with falling crypto prices, with major DeFi protocols experiencing a drop in borrowing volumes since August [2] - Aave, a leading DeFi lending platform, saw weekly borrowing of stablecoins USDT and USDC fall by 69%, from a peak of $6.2 billion to $1.9 billion by the end of November [2][3] - The contraction in borrowing indicates users are unwinding leverage rather than deploying new capital, with Aave maintaining $16.3 billion in outstanding loans despite the downturn [3] CeFi Borrowing Shows Early Signs of Rebound - Centralized borrowing activity initially mirrored the decline seen in DeFi but recent data indicates a potential divergence, with CeFi platforms beginning to see renewed borrowing demand [4] - Nexo experienced a sharp drop in weekly retail credit withdrawals from $34 million in mid-July to $8.8 million by mid-November, followed by a rebound to $23 million, marking a 155% week-on-week increase [5] - This trend suggests users may prefer to borrow against their crypto holdings instead of selling assets at lower prices [5] Centralized Lenders Play a Structural Role in Downturns - Centralized lenders are crucial during market stress, as DeFi borrowing contracts quickly while CeFi platforms absorb liquidity demand, providing flexibility and capital preservation [6][7] - Nexo's cumulative credit withdrawals reached $817 million in 2025, highlighting its role as a significant venue for crypto-backed lending this year [7]