Disclosure

The views and opinions expressed here belong solely to the author and do not represent the views and opinions of crypto.news’ editorial.

Bitcoin’s Turning Point in 2025

2025 is the year when Bitcoin (BTC) will reach its turning point. Historically regarded as a “store of value,” its role in decentralized finance (DeFi) has been minimal, capturing close to 0.3% of its market cap compared to Ethereum (ETH) dominant position. Ethereum’s programmability has made it the natural home for DeFi, but Bitcoin’s $2 trillion market cap and unmatched security present an untapped opportunity ripe for investment and success.

Key Advancements

Recent innovations like BitVM, which allows complex computations and smart contracts to be executed on the Bitcoin blockchain, and staking protocols like Babylon are reshaping Bitcoin’s narrative. These advancements can unlock Bitcoin’s dormant capital, attracting both retail and institutional investors. With venture capital flowing into Bitcoin DeFi projects and forecasts of a $47 billion Bitcoin layer-2 ecosystem, 2025 is set to be pivotal for Bitcoin’s position in DeFi.

Bitcoin’s Emerging Opportunity

Ethereum currently dominates DeFi due to its smart contract capabilities and dynamic ecosystem, capturing over half of the total value locked in crypto. Bitcoin has had a limited role in DeFi, constrained by its lack of programmability and slow block times. However, developers are now merging Bitcoin’s liquidity with Ethereum’s programmability to create a hybrid DeFi model. Leveraging proposals like BitVM and trustless bridges could expand DeFi’s reach, unlocking new use cases and driving wider adoption.

Scalability Solutions

Developers are exploring various methods to enhance Bitcoin’s programmability and DeFi capabilities. Wrapped Bitcoin (WBTC) allows interaction with Ethereum’s DeFi but relies on a centralized approach. BitVM aims to introduce true Bitcoin rollups and trust-minimized bridges, enabling complex decentralized applications and financial operations like lending and token swaps without protocol changes. This positions Bitcoin as more than a store of value, paving the way for greater utility in DeFi.

Opportunities for Investors

Before 2025, Bitcoin’s role in DeFi has been gaining traction, with platforms like Babylon facilitating billions in staking deposits. An increasing number of Bitcoin holders are keen on earning yields through staking. Growing confidence among investors is evident as barriers like limited technology and infrastructure are gradually being overcome. Bitcoin’s unmatched $2 trillion market cap, security, and global trust uniquely position it for retail and institutional investors, driving mainstream adoption of DeFi.

Bitcoin DeFi is now a movement. With key innovations and increasing total value locked (TVL), it may eventually compete with or surpass Ethereum in the DeFi space. Those who recognize and act on Bitcoin’s potential now will benefit as the ecosystem evolves further.

About the Author

Dominik Harz is the co-founder of BOB (“Build on Bitcoin”), a Hybrid Layer-2 that combines the best of Bitcoin and Ethereum for Bitcoin DeFi. A technical expert, Dominik pioneered intent-based bridging for Bitcoin and is working on practical BitVM implementation. He has contributed to DeFi and smart contracts research since 2016 and holds a PhD in computer science from Imperial College London.