The crypto market experienced significant shifts in leverage and risk appetite throughout 2025 and into early 2026, characterized by initial speculative fervor followed by a broad deleveraging phase. This period saw distinct patterns in retail credit withdrawals on platforms like NEXO and borrowing activity on Aave, all while the underlying sentiment struggled to find sustained bullish momentum.
The Rollercoaster of Retail Credit Dynamics
Early 2025 kicked off with aggressive leverage deployment, as NEXO saw retail credit withdrawals soar to $136.63 million in January, indicative of strong market conditions. However, rising volatility quickly led to a sharp reduction in February and March, suggesting forced deleveraging as participants rapidly reduced risk. A brief rebound occurred between April and June, with withdrawals reaching $95.8 million, as traders re-engaged leverage amidst recovering prices. This resurgence proved fleeting. The latter half of 2025 witnessed a sustained decline, plummeting from $67 million in July to a mere $22.04 million by November, reflecting structural fatigue, stalled market upside, and a pronounced risk aversion. By December 2025 and January 2026, withdrawals stabilized at their lowest levels, hinting at a potential bottoming of credit demand and a precursor to gradual market reaccumulation.
Ethereum Borrowing Reflects Shifting Risk Appetite
Paralleling these trends, Ethereum borrowing on Aave also charted a journey from subdued demand to peak speculative exposure and subsequent deleveraging. Beginning modestly in early 2024, ETH borrowing steadily climbed, reaching 400,000 ETH by October and accelerating into early 2025. By mid-2025, borrowing peaked at 1.2 million ETH, signaling maximum leveraged positioning and crowded speculative interest, accompanied by rising rates. This period of heightened activity was followed by a sharp unwinding; borrowing volumes fell significantly to 600,000 ETH and continued to decline to 300,000 ETH by early 2026, with rates easing. This comprehensive deleveraging across both NEXO and Aave underscored a broad market-wide reset of leverage and a cooling of risk appetite.
NEXO's Persistent Downtrend Amidst Liquidity Shifts
Despite the stabilization in credit flows and the broad market deleveraging, NEXO's native token price faced persistent bearish pressure. The token extended its downtrend, breaking below key resistance bands at $0.901 and $0.947, accelerating its decline towards the $0.73 mark. Technical indicators, including downward-trending moving averages and an oversold RSI, confirmed a sustained downside control and weak reversal strength. This indicated a market heavily tilted towards risk-off sentiment, where even stabilizing credit demand was insufficient to prop up NEXO's price, with a reclaim above $0.90 necessary to stabilize its near-term price structure.
