Why is the DeFi lending market shrinking?

[chainsniff]

Q: Crypto lending platforms have lost around $45 billion since October—what’s driving this?
A: The drop is largely a result of falling cryptocurrency prices. Bitcoin slid from $126,000 in October 2025 to under $60,000 in early February 2026 before recovering above $70,000. Since DeFi lending platforms measure deposits in USD, a 30–50% decline in crypto values can erase billions in dollar terms, even if users aren’t actively withdrawing funds. In short, the market’s dollar footprint shrinks as collateral values fall.

[mendez]

so users arent even withdrawing? its just 'the dollar footprint shrinking'? thats a fancy way of saying we all got 50% poorer overnight