The value locked in Bitcoin-based decentralized finance (BTCFi) has skyrocketed by over 2,700% in the last year, potentially changing Bitcoin from a passive store of value into a productive, yield-generating asset, per recent findings from Binance.
BTCFi represents a novel technological shift aimed at integrating decentralized finance features into Bitcoin’s foundational layer. This emerging sector is among the fastest-growing in the cryptocurrency space, with its total value locked (TVL) exceeding $8.6 billion.
According to Binance Research, the increasing value of BTCFi “coupled with potential interest rate reductions may bolster positive sentiment for Bitcoin in the medium to long term,” as noted in a report shared with Cointelegraph.
Bitcoin DeFi, total value locked, 2025 chart. Source: Binance Research
Should the trajectory of the BTCFi sector continue its upward momentum, it could create “new avenues for Bitcoin holders to earn yields via lending, liquidity provision, and other DeFi mechanisms,” a Binance spokesperson told Cointelegraph, further stating:
“This could lead to a transformation in the perception of BTC — shifting from a passive store of value to a productive on-chain asset. While it’s early to fully gauge the impact, these developing use cases could promote wider adoption and eventually enhance demand.”
Related: Bitcoin price could reach $250K in 2025 if Fed shifts to QE: Arthur Hayes
Interest in BTCFi spiked following the Bitcoin halving in April 2024, which introduced the Runes protocol, marking the first fungible token standard on the Bitcoin blockchain.
Various Bitcoin-native initiatives have significantly contributed to this trend.
Babylon has launched Bitcoin (BTC) staking, a first in the network’s history, allowing holders to earn passive income on their assets.
Hermetica has debuted the first Bitcoin-backed synthetic dollar, USDh, which originally offered a 25% yield for investors.
Related: Crypto trader turns $2K PEPE into $43M, sells for $10M profit
BTC Long-Term Holders Resume Bitcoin Accumulation
Long-term Bitcoin holders have commenced accumulating BTC again after the supply held by these holders reached its lowest point in February.
BTC supply held by long-term holders. Source: Glassnode, Binance Research
Long-term holders are defined as wallets that have retained BTC for a minimum of 155 days. The increase in accumulation from these holders has led to a decrease in the Bitcoin supply available on exchanges, which may ultimately result in a price rally driven by supply shocks.
This growing trend of accumulation aligns with a “noteworthy period of Bitcoin adoption,” spurred by the establishment of the US strategic Bitcoin reserve and increasing institutional interest, as stated in the research report.
Source: Margo Martin
On March 7, US President Donald Trump enacted an executive order to create a strategic Bitcoin reserve using BTC confiscated from government criminal cases.
This landmark Bitcoin reserve order precedes the first White House Crypto Summit, which received mixed feedback from the crypto community.
Magazine: Bitcoiner sex trap extortion? BTS firm’s blockchain disaster: Asia Express
