"Tokenization and DeFi Set to Democratize Crypto Lending for All Investors"

Bitwise CEO Predicts Rapid Growth in Crypto Lending Market

Bitwise CEO Hunter Horsley has forecasted a significant expansion in the crypto lending sector over the next 12 to 18 months. According to Horsley, the market is being driven by two primary forces: the growing value of the crypto asset base and the rising trend of tokenization in traditional financial assets. The CEO emphasized that the global crypto market, currently valued at approximately $4 trillion, is enabling investors to maintain their holdings while gaining liquidity through borrowing against their assets, which is both tax-efficient and preserves the long-term value of their crypto investments.

The second driver, according to Horsley, is the tokenization of traditional assets, particularly stocks and bonds, which could soon allow small investors to access credit by collateralizing their holdings directly on the blockchain. This innovation could democratize access to credit, traditionally a domain reserved for institutional players or high-net-worth individuals with significant collateral or connections. Horsley highlighted that even an investor with as little as $7,000 in stocks could use it as collateral for a loan, which could significantly broaden the accessibility of credit.

Recent data supports the Bitwise CEO’s predictions. According to industry reports, the total value of crypto loans reached $53 billion in Q2 2025, reflecting a 27% increase in just one quarter. Decentralized finance (DeFi) platforms such as Aave and Compound have seen notable growth in borrowing activity, with open borrows reaching record levels by mid-2025. Staking has also seen a surge, with over $100 billion in crypto staked as of mid-2025 due to increased institutional participation and blockchain upgrades.

In the centralized finance (CeFi) space, the total lending market stood at $36.5 billion in late 2024, rebounding from the market downturn following the 2021 peak. Open on-chain borrowing saw a 959% increase since late 2022, reaching $19.1 billion by the end of last year. Aave, one of the leading DeFi lending platforms, reported a 15% monthly growth in total value locked (TVL), which reached $41.9 billion. Another prominent DeFi lender, Morpho, reported a 34% jump in TVL over the same period.

The rise of tokenized credit markets is also notable, with real-world asset (RWA) loans on-chain growing from around $5 billion in 2022 to over $24 billion by mid-2025. Tokenized Treasury products alone have doubled to about $4 billion, with major asset managers such as Franklin Templeton bringing money-market funds onto blockchains.

Despite these encouraging developments, the sector faces challenges. Regulatory clarity for tokenized stocks and bonds remains a concern, and the legacy issues of safety in crypto lending persist, especially after the collapses of lending platforms like Celsius, Voyager, and BlockFi during the 2022–2023 downturn. However, Bitwise CEO remains optimistic, asserting that the market is on the brink of steady growth despite these obstacles.

The Bitwise CEO's prediction aligns with a broader industry trend. As DeFi and tokenization continue to gain traction, the lending and borrowing landscape is expected to become a cornerstone of the crypto ecosystem. The convergence of traditional financial systems with blockchain-based solutions could redefine how capital is accessed and managed, potentially bridging the gap between traditional finance and the emerging digital asset economy.