So, bankruptcy filings are up. Way up, actually. According to the data, July saw 71 large companies in the U.S. file for bankruptcy. That’s the highest monthly number since the peak of the pandemic shutdowns back in 2020. For the entire year, we’re already past 446 large filings. That officially puts us above the levels we saw during the worst of the covid disruption.
It makes you wonder what’s going on. The hardest hit seem to be industrial and consumer-focused companies. Big names you’ve probably heard of, like Rite Aid and Forever 21, are back in court after previous attempts to fix their finances just didn’t work. The main culprit? Refinancing. Debt that was super cheap to service just a couple years ago is now maturing and rolling over at much, much higher rates.
Where is the money going?
This is where things get a bit interesting. When credit gets tight like this, investors start looking for places to put their money that aren’t tied to the traditional corporate or banking system. Back in 2020, we saw a similar thing happen. Bankruptcies spiked, and not long after, Bitcoin’s price and trading volume shot up. It seems to be happening again now, with steady money flowing into those new spot Bitcoin ETFs even as corporate credit weakens.
But it’s not all straightforward. The Fed is stuck. They’ve paused rates again, but there’s clear division among them for the first time in decades. Some want to cut rates to ease the pressure on businesses, but others are worried about inflation, which is still hanging around. Producer prices jumped quite a bit in July. And with tariffs so high, the cost of goods isn’t getting any cheaper.
A shift in credit
This pressure is hitting smaller companies the hardest. A startling number of them aren’t even profitable right now. With regional banks pulling back on loans, there’s a real gap opening up for business financing. And perhaps surprisingly, crypto is starting to play a role in filling that void.
I’m not talking about wild speculation, either. Tokenized U.S. Treasuries have grown to over $7 billion. That’s people using blockchain to buy government debt. Stablecoins are moving trillions of dollars in transactions, offering businesses a faster way to settle payments than traditional banks. It’s a small part of the overall picture, for sure, but it’s growing where traditional credit is contracting.
All this is happening while the market waits for what might come next. More crypto ETFs for assets like Solana and XRP could be approved soon, opening the door for even more institutional money. It creates a weird tension. Crypto could be a hedge if inflation stays high, or it could get dragged down if the credit stress gets worse. For now, it seems to be a bit of both.
