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Leverage, or debt, used to buy cryptocurrencies such as Bitcoin (CRYPTO: $BTC ) rose to a record $73.6 billion U.S. in this year's third quarter.

Data from Galaxy Research shows that a growing number of investors are using leverage to purchase Ethereum (CRYPTO: $ETH ), Solana (CRYPTO: $SOL ), and other digital assets.

Leverage is when investors borrow money, usually from a brokerage, to buy stocks, bonds and cryptocurrencies.

The hope is that gains in a tradeable asset will surpass the interest charged on the loans. Investors who buy stocks and crypto using leverage can run into problems when prices fall.

This year's third quarter marked crypto's most levered one on record and occurred just before digital assets entered a sharp correction.

With Bitcoin's price down more than 30% and Ethereum having fallen more than 40% from recent highs, the crypto sector is now in its worst drawdown since 2017.

The record leverage has been driven by onchain lending, which now represents 67% of all crypto-collateralized debt, up from 48% at the market's previous peak in 2021.

Analysts note that there have already been signs of a leverage-induced wipeout, with nearly $20 billion U.S. of crypto liquidations in recent weeks.

Those same analysts are warning of the potential for ongoing volatility in the crypto sector as we head towards year's end.

BTC is down 2% on the year and trading at $91,500 U.S. currently.