The value locked in Bitcoin-based decentralized finance (BTCFi) has surged by more than 2,700% over the past year, potentially transforming Bitcoin from a passive store of value into a productive, yield-bearing asset, according to new research from Binance.
BTCFi is a new technological paradigm that aims to bring decentralized finance capabilities to Bitcoin’s base layer. It is one of the fastest-growing crypto sectors, reaching a total value locked (TVL) of over $8.6 billion.
The growing value of BTCFi, “along with potential interest rate cuts, may reinforce positive sentiment for Bitcoin in the medium and long term,” Binance Research wrote in a report shared with Cointelegraph.
Bitcoin DeFi, total value locked, 2025 chart. Source: Binance Research
If the BTCFi sector’s growth trajectory continues, it could open up “new opportunities for Bitcoin holders to generate yield through lending, liquidity provision, and other DeFi mechanisms,” a Binance spokesperson told Cointelegraph, adding:
“This may contribute to a shift in how BTC is perceived — from a passive store-of-value to a productive on-chain asset. While it’s too early to determine the full impact, these evolving use cases could support broader adoption and, over time, strengthen demand.”
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Interest in BTCFi surged after April 2024’s Bitcoin halving, which introduced the Runes protocol, the first fungible token standard on the Bitcoin blockchain.
Several Bitcoin-native projects have helped accelerate the trend.
Babylon introduced Bitcoin (BTC) staking for the first time in the network’s history, enabling holders to earn passive income from their assets.
Hermetica launched the first Bitcoin-backed synthetic dollar, USDh, which debuted with a 25% yield for investors.
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BTC long-term holders resume Bitcoin accumulation
Long-term Bitcoin holders have restarted their BTC accumulation after the BTC supply held by long-term holders bottomed in February.
BTC supply held by long-term holders. Source: Glassnode, Binance Research
Long-term holders are wallets that have been holding BTC for at least 155 days. Growing accumulation from long-term holders has reduced the available Bitcoin supply on exchanges, which may eventually lead to a supply shock-driven price rally.
The growing accumulation trend among long-term holders aligns with a “significant period of adoption for Bitcoin,” due to the establishment of the US strategic Bitcoin reserve and growing institutional interest, according to the research report.
Source: Margo Martin
On March 7, US President Donald Trump signed an executive order to create a strategic Bitcoin reserve using BTC seized from government criminal cases.
Trump signed the historic Bitcoin reserve order a day ahead of hosting the first White House Crypto Summit, which received mixed reactions from the crypto community.
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