BTCFi VC funding hits $175M as investors focus on consumer apps

Bitcoin’s decentralized finance (DeFi) ecosystem is experiencing renewed venture capital (VC) interest, signaling more demand for the world’s first cryptocurrency as it gains utility as a yield-bearing asset.

Bitcoin DeFi, or BTCFi, is a technological paradigm that seeks to bring decentralized finance capabilities to Bitcoin’s base layer.

According to a new report from Bitcoin DeFi infrastructure provider Maestro, shared with Cointelegraph, the BTCFi ecosystem received $175 million worth of VC funding across 32 rounds in the first half of 2025, with increasingly more capital flowing into consumer apps and demand-driven products.

Capital is pivoting toward “usability and demand-driven products, while infrastructure bets mature in the background,” the report said, adding that 20 of the 32 deals were targeted toward DeFi, custody or consumer applications.

Bitcoin DeFi investment in H1, 2025. Source: Maestro

More VC funding may lead to more utility and yield-generating capabilities for Bitcoin (BTC), driving more investor demand for the world’s first cryptocurrency.

Still, Maestro’s data shows that while first-quarter funding hit $130 million, activity slowed in the second quarter, with just $44 million raised across 12 deals, a 66% decline.

Source: Maestro

Related: Bitcoin price can hit $250K in 2025 if Fed shifts to QE: Arthur Hayes

DeFi and TradFi are converging in the BTCFi ecosystem

BTCFi and Bitcoin-denominated capital markets may become the convergence point of TradFi and DeFi, according to Marvin Bertin, co‑founder and CEO of Maestro.

“For the first time since 2009, the critical pieces for on‑chain financial apps on Bitcoin are in place, spanning exchanges, lending and stablecoins,” Bertin told Cointelegraph, adding:

“Bitcoin is evolving from a static reserve asset into a dynamic, productive financial network.”

Other industry watchers also noted an acceleration in the growing relationship between DeFi and TradFi. Improved infrastructure and growing collaboration between the two industries will make the artificial boundaries between the two sectors dissolve faster than many expected, said Nelli Zaltsman, head of blockchain payments innovation at JPMorgan’s Kinexys.

Related: Bitcoin DeFi surge may boost BTC demand and adoption — Binance

BTCFi saw a more than 22-fold increase in value during 2024, as total value locked (TVL) rose by over 2,000%, driven by infrastructure developments and soaring Bitcoin prices, Cointelegraph reported on Jan. 17.

Bitcoin TVL, 2024 chart. Source: DefiLlama

Babylon was seen as a significant opportunity for Bitcoin-based DeFi, thanks to introducing Bitcoin-native staking for the first time in crypto history.

Interest in building DeFi capabilities on the Bitcoin network has been growing since the 2024 Bitcoin halving, which introduced the Runes protocol, the first fungible token standard on the Bitcoin blockchain.

Magazine: Bitcoin OG Willy Woo has sold most of his Bitcoin — Here’s why