Bitcoin DeFi Revolution: BTCFi Surges 2,700% as Investors Seek Yield

Bitcoin has long been hailed as digital gold—a safe-haven asset designed for holding rather than earning. But that narrative is shifting, thanks to a meteoric rise in Bitcoin-based decentralized finance (BTCFi).

Over the past year, BTCFi’s total value locked (TVL) has surged by an astonishing 2,700%, crossing $8.6 billion, according to new research from Binance.

BTCFi introduces decentralized finance (DeFi) capabilities to Bitcoin’s base layer, allowing holders to earn yield through lending, staking, and liquidity provision—something previously thought impossible on Bitcoin’s traditionally rigid blockchain. 

Binance Research suggests that if this trend continues, BTCFi could redefine Bitcoin’s role in the financial ecosystem, shifting it from a passive store of value to a productive on-chain asset.

“The combination of BTCFi’s explosive growth and potential interest rate cuts could reinforce positive sentiment for Bitcoin in the medium and long term,” Binance Research stated.

Major BTCFi Projects Driving Adoption

The sector’s rapid expansion gained momentum after the April 2024 Bitcoin halving, which introduced the Runes protocol, Bitcoin’s first fungible token standard. This sparked an influx of new Bitcoin-native DeFi projects, further fueling adoption.

Among the most notable is Babylon, which made history by enabling Bitcoin staking—allowing BTC holders to earn passive income for the first time. Meanwhile, Hermetica introduced USDh, the first-ever Bitcoin-backed synthetic dollar, offering an eye-catching 25% yield at launch.

These innovations not only expand Bitcoin’s use cases but also challenge the notion that BTC must remain a non-productive asset. As Binance noted, the full impact remains uncertain, but these new financial mechanisms could broaden adoption and strengthen long-term demand.

Long-Term Holders Tighten Their Grip on BTC

As BTCFi gains momentum, long-term Bitcoin holders (LTHs) have resumed accumulation, further tightening the supply of BTC available on exchanges.

According to Binance Research, Bitcoin’s long-term holders—wallets holding BTC for at least 155 days—began aggressively re-accumulating after hitting a low in February. This reduced exchange liquidity could eventually trigger a supply shock-driven price surge.

The renewed accumulation coincides with growing institutional interest and historic political shifts. Notably, on March 7, U.S. President Donald Trump signed an executive order to establish a strategic Bitcoin reserve, using BTC seized from criminal cases. 

The decision, which came just before the White House Crypto Summit, further underscores Bitcoin’s rising role in the global financial landscape.

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