VC Funding Bolsters Bitcoin DeFi Ecosystem Amidst Renewed Interest
Investment activity in Bitcoin’s decentralized finance (DeFi) ecosystem, referred to as BTCFi, has seen a significant uptick in venture capital (VC) funding during the first half of 2025, signaling stronger demand for the world’s first cryptocurrency as it gains utility as a yield-bearing asset.
BTCFi seeks to integrate DeFi capabilities directly onto Bitcoin’s base layer.
According to a report from Bitcoin DeFi infrastructure provider Maestro – provided to Cointelegraph – the BTCFi ecosystem secured $175 million in VC funding across 32 rounds in the first six months of 2025. This influx prioritizes consumer applications and demand-driven products.
Maestro notes capital is shifting towards “usability and demand-driven products,” while supporting infrastructure continues to mature. Data shows that 20 of the 32 funding rounds targeted DeFi protocols, custody solutions, or consumer-facing applications.
Increased VC investment may enhance the utility and yield potential of Bitcoin, potentially driving greater investor interest in the cryptocurrency.
However, Maestro’s data also reveals a slowdown in Q2 2025. While Q1 saw funding reach $130 million, the second quarter reflected only $44 million raised across 12 deals, a 66% decline from Q1.
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Convergence Between DeFi and TradFi in the BTCFi Ecosystem
Industry observers suggest BTCFi could serve as a convergence point between traditional finance (TradFi) and DeFi. Marvin Bertin, Co-founder and CEO of Maestro, stated:
“For the first time since 2009, the critical pieces for on-chain financial applications on Bitcoin are in place… Bitcoin is evolving from a static reserve asset into a dynamic, productive financial network.”
Nelli Zaltsman, Head of Blockchain Payments Innovation at JPMorgan’s Kinexys, commented that improved infrastructure and industry collaboration are accelerating the blurring of lines between TradFi and DeFi.
Bitcoin DeFi surge “may boost BTC demand and adoption”: Binance
Earlier reporting indicated BTCFi TVL increased more than 22-fold in 2024, driven by new infrastructure and rising Bitcoin prices. The emergence of the Runes protocol after the 2024 Bitcoin halving intensified interest.
