Bitcoin Crisis Threatens $1 Billion DeFi Investment? Here’s What Analysts Say!

Updated

October 30, 2025

Gambar Bitcoin Crisis Threatens $1 Billion DeFi Investment? Here’s What Analysts Say!

Jakarta, Pintu News – After the October 10 market crash that affected Bitcoin and other cryptocurrencies, nearly $1 billion of DeFi positions involving Staked USDe (sUSDe) from Ethena are now under threat. A recent report from Sentora Research reveals that the drastic drop in interest rates in the DeFi market has reduced the profitability of leveraged strategies such as sUSDe loop trading.

Explanation of sUSDe and the Loop Strategy

sUSDe is a staked version of USDe, a synthetic stablecoin that generates yield by staking the underlying USDe token. A popular strategy known as loop trading involves depositing sUSDe as collateral on DeFi platforms like Aave and Pendle to borrow stablecoins like Tether and USD Coin .

Then, the borrowed USDT is used to buy more sUSDe, which is then deposited back as collateral to borrow more USDT and buy more sUSDe again. This cycle is repeated to magnify the yield generated from positive carry-the difference between the yield of sUSDe staking and the cost of borrowing.

Also Read: Top 3 Crypto’s that are Trending and Stealing Investors’ Attention by the End of 2025!

Negative Impact of Market Crashes

usdt and usdc stablecoin market cap — Source: BlockBank

However, since the market crash on October 10, the yield differential has turned negative, which reduces the attractiveness of loop trading. “After the rapid crash on October 10, funding levels in the DeFi market have dropped significantly, cutting yields for basis trading strategies,” Sentora Research said in an email to CoinDesk.

Currently, the borrowing rate for USDT/USDC on Aave v3 Core is around 2.0%/1.5% above the sUSDe yield, making carry negative for users who borrow stable for sUSDe leverage.

If these conditions persist, it could trigger the unwinding of around $1 billion of positions already exposed to negative carry in Aave v3 Core. This negative carry could force collateral sales or deleveraging, which weakens liquidity at venues that provide leverage and potentially cause a cascading market effect.

Next Steps for Traders

Sentora advises traders to watch the spread between Aave’s annualized loan yield and the sUSDe yield, especially when it remains below zero. Usage rates in the USDT and USDC loan pools also need to be watched, where a spike in borrowing costs could accelerate the pressure.

Sentora noted that there was an increase in the number of loop positions approaching liquidation, especially those within 5% of a forced close. Looking ahead, traders need to continue to monitor the surge in utilization rates in the USDT and USDC loan pools, which could increase borrowing costs and increase stress amid the negative spread between Aave’s annualized loan yield and the sUSDe yield.

Conclusion

With volatile market conditions, it is important for investors and traders in the DeFi market to remain vigilant and prepared for rapid changes. Understanding the risks and current market dynamics is key to managing investments wisely and avoiding large losses.

Also Read: Bitcoin (BTC) Breaks $115,000, Fear & Greed Index is Neutral!

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