Despite a stagnation in the total value locked (TVL) in Bitcoin’s decentralized finance (BTCFi) ecosystem since the start of 2025, experts remain bullish about its potential, forecasting significant growth over the next year. The decline in TVL has not dampened enthusiasm for BTCFi’s future trajectory, with some experts attributing its rise to factors such as institutional investors seeking yield and the expansion of necessary infrastructure.
BTCFi TVL Experiences Surge and Subsequent Decline
In the last quarter of 2024, BTCFi’s TVL surged from just over $800 million to an all-time high of $6.51 billion by December. Bitcoin’s performance in decentralized finance allowed it to surpass Tron, becoming the third-highest ranked platform in terms of TVL. However, since the start of 2025, BTCFi’s TVL has declined slightly, from a peak of $7.14 billion on January 19 to around $6.58 billion by February 13.
This decline in BTCFi’s TVL mirrors a broader trend across decentralized finance protocols. For instance, Ethereum, which holds the largest TVL, experienced a drop from nearly $77 billion to $57.34 billion. Even Solana, once buoyed by market movements surrounding U.S. President Donald Trump’s inauguration, saw a gradual decline in its TVL.
Long-Term Growth Still Expected
Despite the recent decline, many experts remain optimistic about BTCFi’s future. Galaxy Digital has predicted that by 2030, 2.3% of Bitcoin’s circulating supply could be bridged into BTCFi, potentially reaching $47 billion. This has fueled belief that BTCFi is still in its early stages, and experts such as Tristan Dickinson, CMO of Exsat Network, agree that the best is yet to come.
“The 2,000% surge in BTCFi TVL is just the beginning. With the increasing performance of Bitcoin ETFs, price rallies, and advancements in staking technology, we’re seeing unprecedented growth,” Dickinson said. “Expect BTCFi to claim a much larger share of total DeFi TVL in the coming years.”
Factors Driving BTCFi Growth
BTCFi’s rise can be attributed to several factors, including institutional investors seeking yield from their Bitcoin holdings without relinquishing ownership. These investors are exploring options beyond Bitcoin ETFs, and the development of new infrastructure, such as enhanced exchanges, tokenization methods, and improved bitcoin staking solutions, is further fueling growth.
Mithil Thakore, co-founder and CEO at Velar, emphasized that BTCFi’s market share is set to increase as new incentives and opportunities within Bitcoin’s DeFi ecosystem become available.
Predictions for 2025: Triple-Digit Growth
Experts are particularly optimistic about BTCFi’s prospects for 2025. Kyle Ellicott, Executive Director for the Stacks Asia Foundation, predicts that the TVL in BTCFi could triple by the end of the year. “From mid-August to year-end 2024, staking protocols alone activated more than 62,000 previously idle bitcoins, driving the industry’s expansion to $6.5 billion,” Ellicott explained. “With more growth expected in 2025, analysts, including myself, are predicting a threefold increase in TVL by the year’s end.”
Luke Xie, co-founder and CEO of Satlayer, also sees substantial growth in BTCFi as the ecosystem matures. This expansion is driven by the desire to leverage Bitcoin’s security and liquidity to support new decentralized applications.
With Bitcoin’s decentralized finance ecosystem still in its early stages, experts agree that the sector is poised for continued growth, with predictions of a significant rise in TVL as the necessary infrastructure and market dynamics evolve over time.
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