Liquidity check: $15.6B private credit redemption wave laps at bitcoin ETF's $5B outflow 🏊

Redemption requests in the $2 trillion private credit market surged to $15.6 billion in the second quarter, breaching standard 5% quarterly caps at most business development companies and leaving many investors only partly paid, according to data tracked by Fitch. The figure far exceeds the roughly $5 billion pulled from U.S.-listed spot bitcoin ETFs over the same period, underscoring a broader scramble for cash across risk assets. Investors yanked $4 billion from U.S.-listed spot bitcoin ETFs in June alone, led by BlackRock's IBIT, per data source SoSoValue, as capital rotated toward the AI trade and offerings such as SpaceX's blockbuster IPO.

Bitcoin's price fell roughly 14% in the second quarter, dipping below $60,000 to register its third straight quarterly loss, with $BTC last changing hands at $63,231.03. In private credit, Fitch said redemption requests exceeded the 5% quarterly cap at 10 of the 16 business development companies, leaving many participants in line for future quarters. Average requests rose to 10.3% of shares from 9.7% in the first quarter but ranged widely, from 1.3% to 38.1% at Blue Owl's OTIC, and many were follow-ups from investors only partly satisfied the prior quarter. New inflows fell by about 56% on average, so most funds saw net outflows of roughly 3% of the prior quarter's net asset value.

Fitch expects continued pressure on the segment. "With BDCs capping redemptions at 5% quarterly, unfulfilled requests will lead to persistent elevated redemptions for many firms in the coming quarters," the ratings agency said. The simultaneous drawdown in bitcoin ETFs, the stress in private credit, and a depleted U.S. strategic petroleum reserve have prompted concerns that financial and physical buffers against risk are eroding across markets.