Breaking! BlackRock and Blackstone hit with massive $10 billion run, Wall Street growth engine explodes, is $100 billion market cap evaporation just the beginning?

This year’s first quarter revealed a significant signal deep in Wall Street. Private credit funds targeting high-net-worth individuals experienced concentrated withdrawals. Top management firms, including Blackstone and BlackRock, faced redemption requests totaling over $10 billion and made a decision: they only agreed to pay out about 70% of that.

This means investors can only get back $70 for every $100 redeemed, with the remaining amount deferred. Market analysis suggests that as more institutions complete their assessments, this total redemption amount is expected to rise further. These funds manage approximately $166 billion in assets, which is a small part of the entire trillion-dollar direct lending market, but they have been among the fastest-growing sectors in recent years.

The reversal of capital flows is clear. Over the past five years, these funds attracted nearly $200 billion in net inflows, fueling the rapid growth and profit expansion of private equity giants. Now, when redemption restrictions are triggered, investors suddenly realize that these seemingly high-yield products do not guarantee full and immediate exit when needed. This “semi-liquid” risk is being re-priced.

Analysts estimate that the size of retail-oriented private credit funds has surged from $34 billion at the end of 2021 to $222 billion at the end of last year. But now, growth is reversing. Over the next two years, these funds could face asset outflows of $45 billion to $70 billion.

For publicly listed asset management firms, this is not just a shrinking management scale but also a shake-up of core revenue. These funds contribute stable, predictable management fees and performance fees. For example, Blackstone’s $48 billion Bcred fund has become its largest single fee source, accounting for about 13% of the company’s total fee income, generating around $1.2 billion last year.

Another firm, Blue Owl, paid approximately $44.7 million in fees last year from its $35 billion flagship credit fund. It is estimated that Blue Owl’s dependence on retail products is the highest among peers, with about 21% of its annual fee income tied to this segment. The industry has long promoted a story of “stable fee base growth” to justify higher valuation multiples, once reaching 30 to 40 times fee-based earnings.

However, as retail funds withdraw amid market volatility, this growth story begins to crack. Market reactions have been swift and intense. Since the start of the year, the stock prices of publicly listed private equity firms like Blackstone, KKR, Blue Owl, Ares, and Apollo have generally fallen 25% or more, with a combined market value loss exceeding $100 billion.

Market observers note that this sell-off has not adequately distinguished between different business models. Some companies relying more on long-term stable funds like pensions are also being sold off. It’s important to clarify that firms like Blackstone do not hold these loans on their own balance sheets, so direct credit losses are not the core issue.

The real core is that investors are reassessing the certainty of these companies’ future growth, the stability of retail funds, and the sustainability of the previously highly valued “fee base income” story. As one of Wall Street’s most important growth engines slows down, the resulting valuation re-evaluation will have far-reaching impacts beyond just a few stock charts. For the macro liquidity-sensitive markets of $BTC and $ETH, this traditional financial “bank run” is a stress test signal that must be considered.

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