A recent report from Binance highlights that decentralized finance (DeFi) applications could significantly enhance Bitcoin's liquidity, unlocking billions in dormant BTC. Currently, only about 0.79% of Bitcoin is utilized in DeFi, indicating a vast untapped market. The report elaborates that Bitcoin holders can use their assets more effectively by employing them as collateral for loans, earning yield through lending, or participating in structured products. Historically, Bitcoin's design did not accommodate complex financial applications, but emerging DeFi platforms compatible with Bitcoin are changing this dynamic. As the regulatory environment under the Trump administration becomes more pro-crypto, the potential for Bitcoin's role in DeFi is expanding. The report also emphasizes that while traditional DeFi users often prioritize active capital deployment, Bitcoin holders have been more focused on security and self-custody. Therefore, successful BTCFi applications must cater to these preferences to gain traction in the market.

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