Bitcoin Defi TVL Loses Over $500m Since March

Despite the recent surge in the Bitcoin layer two ecosystems, the network is beginning to see a notable decrease in the total value of assets locked on its DeFi protocols.

Bitcoin Drops Below $1.2B in TVL

On-chain data provided by the blockchain analytics platform DeFiLlama shows that the total value locked (TVL) in Bitcoin-based DeFi protocols has decreased by more than $500 million from the $2B milestone it witnessed in February.

While the network has just concluded its highly anticipated halving event, this drop in TVL suggests that investors and users are withdrawing their funds. This slump in Bitcoin’s DeFi may have been triggered by the network’s post-halving price dump that has left many investors concerned about the prospects of the blockchain and its associated DeFi projects.

With Bitcoin falling below $1.2 billion as of May 29, 2024, the persisting fall in its market performance over the past month has extended to its DeFi landscape. Nonetheless, Bitcoin’s fall in TVL is also traceable to the overall market downturn, as the market is currently unstable, with investors preparing for the potential bull run.

Bitcoin Falls Out of Top 6 Largest Chains by TVL

As of February, Bitcoin had reportedly emerged as DeFi’s sixth-largest blockchain with a TVL of over $2 billion, ranking neck-in-neck with Solana, which has always remained a strong contender in the DeFi ecosystem.

However, the network has fallen out of this position, as it currently ranks as the top nine blockchain by TVL. The decrease in the total amount of assets staked on the blockchain by its layer two protocols has seen the Base and Merlin blockchain outperform Bitcoin.

With the increasing influx of new Solana-based projects attracting the interest of many crypto users, there are indications that users may be moving their assets to other DeFi protocols that offer better incentives, higher yields, or more innovative features when compared to Bitcoin-based DeFi protocols.