NEXO and Ethereum Market Trends: A Comprehensive Analysis
The retail credit landscape on NEXO experienced a dramatic shift starting January 2025, showcasing the dynamic nature of digital asset markets. Retail credit withdrawals opened the year at a substantial $136.63 million, reflecting aggressive leverage strategies as traders capitalized on favorable market conditions. However, as volatility increased, the scenario quickly changed, with withdrawals plummeting to $85.3 million in February and further down to $54.4 million in March. This rapid decline indicated a forced tightening of balance sheets rather than a simple cooling of demand. Early signs of deleveraging suggested that retail participants were becoming increasingly cautious, adjusting their strategies as liquidity conditions evolved.
By April, retail credit withdrawals began to show signs of recovery, surging to $75.2 million, followed by $79.8 million in May, and peaking at $95.8 million in June. This rebound signified a renewed engagement from traders who were re-entering risk assets as price momentum began to recover. The month-on-month increase in withdrawals highlighted traders’ willingness to leverage up again, indicating a shift toward optimism in market conditions. This positive momentum, however, would prove to be short-lived as the second half of the year exhibited structural fatigue.
Starting in July, the trend began to falter with withdrawals decreasing to $67 million, maintaining a modest $70 million in August before plummeting to $48.5 million in September. The decline accelerated dramatically to $22.04 million by November, reflecting a significant decline in speculative appetite and heightened risk aversion. With liquidity thinning, this consistent deleveraging pointed to an urgent need for balance sheet resets, as excess leverage was flushed out of the system, and marginal buyers began to retreat from the marketplace.
As we approached the end of 2025 and the beginning of 2026, withdrawals on NEXO appeared to stabilize, settling at approximately $23.957 million in December and $23.965 million in January. This stabilization suggested that credit demand may be nearing a bottom, often indicating a potential for gradual market reaccumulation as traders rebuild confidence in the market. However, this period of stability in withdrawals and credit demand coincided with tightening liquidity conditions, setting a complex stage for future market activity.
In tandem with NEXO’s dynamic credit landscape, the Ethereum market experienced notable borrowing trends on Aave. Commencing in 2024, Ethereum borrowing hovered around 150,000 to 200,000 ETH at interest rates of approximately 2.5–3%, as market conditions stabilized. Demand escalated rapidly, steadily increasing to 400,000 ETH by October 2024 as traders leaned into leveraged positions. Early 2025 saw momentum accelerate drastically, with utilization of Ethereum reaching nearly 800,000 ETH and borrowing costs spiking close to 3.5%. This surge indicated crowded leverage and an increased demand for collateral amid strengthening Ethereum price trends.
However, this speculative environment peaked mid-2025, marked by an all-time high of 1.2 million ETH borrowed. This peak was short-lived, as pressures began emerging to deleverage, resulting in a decline towards 600,000 ETH as risk sentiment began to shift. By early 2026, utilization figures dropped to about 300,000 ETH, and borrowing rates gradually eased toward 1.5–2%, reflecting a cooling risk appetite and a resetting of leverage dynamics in the market.
As NEXO faced downward price pressure, key support levels became critical in determining the future trajectory. The price slipped below crucial resistance bands at $0.901 and $0.947, reinforcing a bearish market structure. Selling pressure escalated, pushing the price into the $0.80 demand zone, where support was tested but eventually failed. Price momentum waned, pushing values down towards $0.73, while moving averages trended downward, indicating sustained downside control. The RSI hovered around 26, signaling oversold conditions but also suggesting a weak reversal potential.
In conclusion, the significant expansion and subsequent contraction of leverage across credit markets reflect a broader liquidity reset, illustrating a general decline in risk appetite. Although credit flows are beginning to stabilize, the consistent decline in NEXO’s price suggests that market sentiment remains risk-off, even amid a pullback in leverage. As the market continues to navigate these complexities, traders and investors must stay vigilant, as rebuilding confidence may take time before any sustainable recovery emerges.
