BTCFi VC Funding Surges to $175M as Focus Shifts to Consumer Apps

     

Venture capital bets on Bitcoin DeFi usability as infrastructure matures

Bitcoin’s decentralized finance sector, or BTCFi, is gaining serious traction with venture capital firms, raking in $175 million across 32 funding rounds in the first half of 2025, according to a report by Maestro. The majority of the capital is now flowing into consumer-facing apps and demand-driven products, marking a shift from early infrastructure plays.

The spike in funding reflects growing confidence in Bitcoin as a yield-generating asset – a transformation from its historical role as a passive store of value. “Capital is pivoting toward usability and demand-driven products, while infrastructure bets mature in the background,” the report noted.

While Q1 saw an impressive $130 million raised, VC activity slowed in Q2 to $44 million across 12 deals – a 66% decline. Still, analysts say the long-term outlook for BTCFi remains strong as the ecosystem moves closer to delivering everyday financial tools on Bitcoin rails.

BTCFi Positioned as Bridge Between DeFi and TradFi

Marvin Bertin, CEO and co-founder of Maestro, believes BTCFi is becoming the meeting point for traditional finance and decentralized finance. “For the first time since 2009, the critical pieces for on-chain financial apps on Bitcoin are in place, spanning exchanges, lending and stablecoins,” he said.

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

Bertin added, echoing the broader industry narrative that Bitcoin is no longer just digital gold.

This sentiment was backed by JPMorgan’s Kinexys blockchain division, with head of payments innovation Nelli Zaltsman noting that the boundary between TradFi and DeFi is rapidly dissolving, fueled by stronger infrastructure and industry collaboration.

BTCFi experienced explosive growth in 2024, with total value locked increasing over 2,000% as new platforms emerged and Bitcoin’s price surged. A key driver was Babylon, which introduced Bitcoin-native staking – a first for the crypto sector.

The post-halving launch of the Runes protocol, Bitcoin’s first fungible token standard, also accelerated innovation. As demand builds for yield-generating tools on the Bitcoin network, BTCFi is becoming one of the most watched sectors in crypto venture.