Crypto Market Crash: Here’s How The DeFi Lending is Reacting to Investor Selloff

Key Insights:

• Users now prefer to borrow against digital asset collateral on centralized platforms amid the ongoing crypto prices and market correction.
• DeFi TVL plunged to $117.9 billion, reinforcing a decrease in lending, staking, and trading activities.
• Evernorth CEO predicts spike in institutional DeFi integrations in 2026

The crypto prices has experienced a massive correction since early October 2025, following Bitcoin’s all-time high of $ 69,044. Alongside the falling crypto market, decentralized borrowing has contracted sharply.

Borrowing from Aave vs Nexo Amid Crypto Market Crash

Onchain data analytics platform CryptoQuant highlighted a divergence between decentralized and centralized borrowing during the recent crypto market crash.

According to CryptoQuant, borrowing from decentralized finance (DeFi) platforms like Aave has fallen sharply.

For context, weekly borrowing of stablecoins like USDT and USDC on Aave peaked at $6.2 billion around early August 2025. However, by late November, borrowing dropped 69% to $1.9 billion.

This decline is closely linked to falling crypto prices, which reflect reduced leverage demand and risk appetite. Typically, crypto investors borrow heavily during bull markets to amplify their positions.

In contrast, fear of liquidations rises during corrections as falling collateral values can trigger forced sales. As a result, traders deleverage by repaying loans or avoiding new ones completely.

Although new activity dried up, the Aave platform still maintained $16.3 billion in outstanding borrowings. This suggests that the core loan book remained resilient.

Unlike Aave, Nexo, a centralized lending platform, has seen a rebound in new borrowing despite the recent market crash. Recent data showed weekly retail credit withdrawals fell from $34 million in mid-July to $8.8 million in mid-November.

However, as crypto prices fell further, withdrawals spiked to $23 million (+155% week-over-week), suggesting a shift in user behavior. Rather than selling into weakness, users increasingly prefer to borrow against crypto collateral.

Crypto Prices and DeFi TVL in Bearish Mode

Meanwhile, the DeFi total value locked (TVL) paints a bearish picture. According to data from DeFiLlama, the total DeFi TVL stands at approximately $117.9 billion, marking a 1.9% decline over the past 24 hours.

TVL measures the total USD value of assets locked in DeFi protocols for activities like lending, staking, and trading.

The worth of locked assets can help give investors insight into the performance of the market. Usually, a higher TVL value indicates growth in the value of major cryptocurrencies.

The recent DeFi TVL dip continues amid a broader crypto price correction trend observed since late October.

Bitcoin (BTC), the biggest cryptocurrency, hit its ATH above $126,000 in early October 2025, but then fell sharply. Following this move, BTC dropped around 30% by November and December.

Currently, BTC is trading around $87,000, while the total crypto market cap has declined to $2.96 trillion.

Evernorth CEO Predicts Spike in Institutional DeFi in 2026

In a recent X post, Asheesh Birla, CEO of Evernorth, an XRP Digital Asset Treasury firm, has predicted increased institutional DeFi adoption in 2026.

“2026 could be the beginning of Institutional DeFi,” Birla stated.

The Evernorth CEO based his prediction on advancements in regulatory clarity and a growing enterprise demand for crypto market.

Birla emphasized that corporates will use DeFi protocols combined with artificial intelligence (AI) to automate back-office operations. He believes this could streamline global money management, yielding efficiency gains in payments and liquidity next year.

The Evernorth CEO also predicted a surge in local stablecoins and on-chain FX markets. He foresees the emergence of region-specific stablecoins to challenge the $9.6 trillion traditional FX market.

Birla also forecasted that Non-Fungible Tokens (NFTs) will evolve into access tokens in 2026. This targets sports teams, entertainment, and brands for enhanced online and offline experiences.

The central narrative for Birla is that the crypto market are maturing beyond hype to solve real-world problems. He hopes to see the asset class power everyday finance by 2026, with institutions leading the charge.