Signs of increasing stress in credit markets have brought intense demand for hedges among investors. Recently, the number of open positions in put options in some major credit ETFs in the USA has reached record levels. These developments raise the question of how the pressures in traditional debt markets may be reflected in digital assets.
Increasing Concern in Credit Markets
In the analysis published by Kobeissi Letter, total open put options in the four major US credit ETFs reached 11.5 million contracts. These products include iShares iBoxx High Yield Corporate Bond ETF, State Street SPDR Bloomberg High Yield Bond ETF, iShares iBoxx Investment Grade Corporate Bond ETF and Invesco Senior Loan ETF.
While the amount of open contracts in these ETFs has doubled in the last 12 months, the 10 million contract threshold seen in the bear market in 2022 has been exceeded. This trend shows that investors are looking for quicker protection against a possible sharp depreciation in the credit market.
It is stated that investors are accelerating their hedge transactions against a collapse in the credit market.
Put options; It consists of contracts that give investors the right to sell the underlying asset at a predetermined price if it falls below a certain price. Institutional investors who are concerned about price declines often prefer such a protection mechanism for their portfolios.
Expansion of Credit Margins on a Global Scale
Kobeissi Letter also stated that high-yield loan spreads for the technology sector increased to 556 basis points, exceeding the peak in April 2025. Spreads in general high-yield bonds also increased to 361 basis points, reaching the highest levels since November 2025.
It was commented that low-grade bonds belonging to the technology sector were traded at a premium of 195 basis points higher than the general market for the first time in the last three years and that credit market sales had just begun.
It seems that credit stress is not limited to the USA only. The iTRAXX Europe Crossover index, which follows the European markets, rose up to 270 basis points, and iTRAXX Europe Main increased up to 57 basis points. In Asia, spreads on investment-grade dollar bonds, excluding Japan, reached their highest level in seven months.
While the fastest increase in credit default swaps has been observed recently since September, it is reported that some issuers may postpone their planned bond sales.
The escalation of conflicts in the Middle East also increased the uneasiness in the market. It stands out that regional tension puts additional pressure on pricing in the credit market.
Possible Effects on Cryptocurrencies
These stress signals in the credit market can also lead to significant consequences for crypto assets. The record put position seen in US credit ETFs shows that institutional investors are preparing for the possibility of serious stress.
If the squeeze deepens in the traditional market, there may be an increase in sales and volatility in risky assets such as Bitcoin and Ethereum. In addition, in the future, central banks may take steps to increase liquidity or reduce interest rates in case of a new financial crisis. In such a scenario, it is considered that Bitcoin may come to the fore again as a liquidity-sensitive asset.
In the current situation, the extraordinary hedge demand observed in credit markets reflects the prevailing cautious outlook. Whether this stress will be permanent or not will be closely monitored in the coming weeks.
