The US stock market has been on a tear, and a lot of it is running on borrowed money. That borrowed money just got pricier, which should make anyone holding risk assets, crypto included, pay attention.
Margin debt surged to an all-time record of $1.42 trillion in May 2026, according to FINRA data. That’s an 8.5% jump from April and a 53.7% increase compared to a year earlier. Meanwhile, the cost of equity financing has climbed to its highest level since December 2024, squeezed by surging demand and strained bank balance sheets.
The leverage machine behind the rally
Leveraged exchange-traded funds alone drove over $100 billion in net buying activity in the prior month. Of that, $38.1 billion concentrated in semiconductor stocks. Hedge funds are carrying gross equity exposure estimated at around $10 trillion.
Why financing costs are climbing
