Blue Owl Capital, a private capital firm with more than $307 billion in assets under management, has permanently suspended investor redemptions in its retail-focused private debt funds.
The suspension caused concern among economists. Additionally, important questions have arisen as to whether private credit markets have the potential to impact the broader crypto market.
What you need to know about Blue Owl redemption changes
The private credit company has seen an increase in withdrawal requests in recent months, according to Bloomberg. This is due in part to investor concerns about exposure to software companies amid the proliferation of artificial intelligence.
The FT noted that Blue Owl Capital Corp II (OBDC II) has suspended redemptions since November. The company had previously hinted it might resume withdrawals later this quarter, but has now abandoned that plan.
Earlier this week, the company revealed that quarterly redemptions will no longer be available to OBDC II investors. Instead, the company plans to distribute cash through periodic payments associated with asset sales.
“We’re not stopping redemptions. We’re just changing the way we provide redemptions,” Blue Owl co-president Craig Packer told analysts on a conference call Thursday, according to Reuters.
Payments to fund holders are expected to be about 30% of the fund’s value, up from the previous cap of 5%, Packer said.
“We will 6x our capital and return it to all shareholders over the next 45 days. We will continue to advance this plan to return capital to OBDC II investors in the coming quarters,” Blue Owl commented on its latest plans.
Blue Owl also moved to sell about $1.4 billion in assets from three credit funds. Chicago-based insurance company Kubale, the California Public Employees’ Retirement System, the Ontario Municipal Employees’ Retirement System and the British Columbia Investment Management Corporation bought the bonds, according to people familiar with the matter. Blue Owl added that the loan was sold for 99.7% of face value.
Private credit markets face growing tensions
Market analyst Crypto Rover suggested Blue Owl’s redemption freeze reflects growing pressure across the $3 trillion private credit sector. He outlined some warning signs.
First, approximately 40% of direct lenders currently report negative free operating cash flow. The default rate for middle market borrowers rose to 4.55% and continues to rise.
In particular, 30% of companies with debt before 2027 have negative EBITDA, making refinancing difficult. Meanwhile, credit rating downgrades have outnumbered upgrades for seven consecutive quarters.
“If the stress in the private credit market continues, it will first affect small and medium-sized enterprises, for which the private credit market is an important source of funding. Furthermore, refinancing costs will rise, defaults will increase, and a vicious cycle will emerge. The only way to stop this is to lower interest rates and provide liquidity,” the analyst added.
Economist Mohamed A. El-Erian wondered if this situation could represent an early warning signal similar to the one seen in 2007 before the 2008 global financial crisis.
Is this a “canary in the coal mine” moment like August 2007?
This question will be on the minds of some investors and policymakers this morning as they assess the news that, to quote the FT, “private credit group Blue Owl will permanently restrict investors’ access to investments”… pic.twitter.com/DhvLlIAy5S— Mohamed A. Eleriam (@eleriam) February 19, 2026
Impact on the virtual currency market
While stress in private credit markets does not automatically lead to direct contagion to cryptocurrencies, the indirect link is worth noting. BeInCrypto’s recent analysis shows that Bitcoin is closely tracking US software stocks.
A significant portion of private credit is allocated to software companies, linking these markets through shared growth risk. Tighter lending conditions or increased refinancing risks could put pressure on the software sector’s valuation.
Rising defaults, widening credit spreads and limited access to capital are likely to weigh on growth stocks. Given the correlation between Bitcoin and high-growth stocks during the tightening cycle, a continued downturn in software could spill over into the crypto market.
However, this is still a secondary macro effect rather than a direct structural effect. The key variable is the broader financial response. Bitcoin, like technology, could face a decline if stress leads to tighter financial conditions.
If that triggers monetary easing or new liquidity support, cryptocurrencies could ultimately benefit. Currently, risks are cyclical and liquidity-driven, rather than systemic to the digital assets themselves.
The post Blue Owl Halts Redemptions Amid Private Credit Stress: Will Cryptocurrencies Be Affected? appeared first on BeInCrypto.
