Institutions, ETFs, and DeFi protocols: what's driving Bitcoin to new highs
New ATH and record Bitcoin market cap
In the second half of May 2025, Bitcoin once again hit a new all-time high (ATH), reaching $112,000. At its peak, the market capitalization of the leading cryptocurrency nearly reached $2.2 trillion.
By market cap, Bitcoin entered the top ten most significant assets in the world, trailing only slightly behind Google's stock.
Over the past year, Bitcoin's market capitalization has grown by nearly 59%. Meanwhile, the Bitcoin dominance index has steadily increased since May 2022, growing by 64% — from 38.3% to 63%.
Bitcoin surpasses gold by number of holders
According to River's 2025 report, nearly 50 million Americans own Bitcoin, representing approximately 15% of the U.S. population. In comparison, only around 37 million U.S. residents own gold.
According to the Nakamoto report, one in four of the 3,300 surveyed Americans is considering transferring part of their gold reserves to Bitcoin. Most respondents are willing to move up to 39% of their capital into the leading crypto asset.
This indicates Bitcoin's growing popularity and recognition as a store of value and hedge against inflation — a role traditionally held by gold. One of the primary drivers of this recognition has been the rise of institutional investments, including Bitcoin exchange-traded funds (ETFs).
Experts Michael Saylor (head of MicroStrategy) and Caitlin Long note that Bitcoin's dominance over gold is not merely a situational trend change but a fundamental shift in how value assets are perceived.
Bitcoin is no longer an outsider in DeFi
Since mid-2024, the DeFi ecosystem for the first cryptocurrency has rapidly evolved thanks to the launch of new protocols enabling Bitcoin's use in decentralized finance (including for restaking). As of June 2025, Bitcoin's ecosystem ranks among the top three in total value locked (TVL) in the DeFi market, surpassing BNB Smart Chain (BSC), Tron, and Base.
Bitcoin's DeFi ecosystem TVL reached $6.5 billion amid the launch of new DeFi platforms, including restaking protocols Babylon, Lombard Finance, and Solv Protocol. By this metric, Bitcoin now trails only Ethereum ($64.9 billion) and Solana ($8.7 billion).
Since the beginning of 2024, Bitcoin's DeFi TVL has increased more than 21-fold — from $304 million to $6.5 billion. The leading protocols by TVL in the ecosystem are:
- Babylon Protocol — $5.1 billion,
- Lombard Finance — $1.8 billion,
- Threshold Network — $1.8 billion,
- Solv Protocol — $510 million,
- Lightning Network (LN) — $441 million.
The development of the decentralized Bitcoin ecosystem has led to the emergence of a distinct segment in the DeFi market — Bitcoin DeFi, also known as BTCFi. The goal of Bitcoin DeFi is to transform the leading cryptocurrency from a simple store of value into a DeFi tool with a wide range of functions:
- Staking and restaking,
- Lending,
- Trading (atomic swaps),
- Liquidity mining and yield farming.
Experts note that BTCFi is currently the most undervalued segment in the DeFi market, particularly due to the still-unrealized potential of L2 solutions and large volumes of unused ("dormant") liquidity.
Quantum risks: myth or reality?
Experts from Chaincode Labs believe that cryptographically relevant quantum computers (CRQC) pose a potential threat to the Bitcoin protocol. According to the report, 20% to 50% of Bitcoins in circulation are vulnerable to quantum threats.
Of the 32 experts surveyed by the Global Risk Institute, about one-third believe that CRQCs will appear within the next decade with at least a 50% probability. Experts warn of the potential danger to Bitcoin posed by quantum computers, which could break Shor's cryptographic algorithm and enable CRQCs to derive private keys from public ones in a matter of days or even hours. Classical computers would take trillions of years to solve this problem.
Chaincode Labs' report emphasizes the need to develop a quantum-resistant protocol within the next seven years. Developers have already proposed several solutions for Bitcoin's quantum security:
- OP_Cat opcodes (BIP-347) using Lamport quantum-resistant signatures, which were disabled by Satoshi Nakamoto in 2010 over concerns of potential network vulnerability;
- QuBit (BIP-360) — a mechanism using a new type of Bitcoin transaction outputs;
- Quantum-resistant Taproot scripts using the OP_SPHINCS opcode to verify post-quantum signatures;
- Signature compression algorithm utilizing STARK proofs to enhance Bitcoin network throughput.
Bitcoin community split
One of the most significant conflicts among Bitcoin supporters erupted in the spring of 2025 due to the "83-byte dispute." The team behind the original Bitcoin Core wallet decided to remove the 83-byte data limit in the OP_RETURN opcode. Experts note that this limit hinders the creation of new transaction types, which would otherwise require a soft fork (a minor protocol change) or even a hard fork (a significant blockchain change).
The Bitcoin Core team believes the opcode data limit stifles innovation, including the development of Layer-2 (L2) solutions, and is outdated and inefficient since users bypass the restriction anyway.
Opponents argue that removing the limit could overload the network with data, turning the blockchain into a "universal database" and rendering Bitcoin a "useless altcoin." Eventually, the dispute was resolved, and the Bitcoin Core team abandoned the update that would have lifted the 83-byte restriction.