At the start of the week, Bitcoin (BTC) price succumbed to pressure from sellers, declining from $84,500 on March 17, to $81,300 at the time of writing. This downward movement was most likely a sell-off related to the Federal Open Market Committee’s (FOMC) two-day meeting, which takes place on March 18-19.

Federal Open Market Committee (FOMC) meetings tend to act as market resets. Each time the FOMC meets to deliberate on US monetary policy, crypto markets brace for impact.

Historically, traders de-risk and reduce leverage ahead of the announcement, and after the meeting and press conference from Federal Reserve Chair Jerome Powell the markets can be equally reactive.

The press release of the current FOMC meeting scheduled for Wednesday, March 19, at 2:30 pm ET, and it could trigger major movements in the Bitcoin market. Analyzing market behavior leading to its release could offer clues about Bitcoin’s next move. 

To traders, FOMC means volatility

Traders are closely monitoring the FOMC minutes for any shifts in the Fed’s stance on inflation and interest rates. 

After the FOMC announcement, Bitcoin price tends to react sharply. Since the beginning of 2024, BTC prices mostly declined after the FOMC decided to maintain rates, as can be seen on the chart below. 

The notable exception was the pre-halving rally of February 2024, which also coincided with the launch of the first spot BTC ETFs. When US interest rates were cut on Sept. 18, 2024, and Nov. 7, 2024, Bitcoin rallied.

However, the third cut on Dec. 18, 2024, did not yield the same result. The modest decrease by 25 basis points to the 4.50%–4.75% range marked the local Bitcoin price top at $108,000.

BTC/USD 1-day chart with FOMC dates. Souce: Marie Poteriaieva, TradingView

Markets deleverage before FOMC, except this time

A key indicator that provides insight into market sentiment is Bitcoin open interest—the total number of derivative contracts, mostly $1 perpetual futures, that have not been settled.

Historically, Bitcoin open interest falls before FOMC meetings, showing that traders are reducing leverage and risk exposure, as per the graph based on CoinGlass data.

Bitcoin futures open interest and FOMC dates. Source: Marie Poteriaieva, CoinGlass

However, this month, another pattern has emerged. Despite Bitcoin’s $12 billion open interest shakeout earlier this month, in the days preceding the FOMC there was no noticeable decrease in Bitcoin’s open interest. BTC price, however, declined, which is unusual and could indicate a strong directional bet.

This could also be a sign that traders feel less anxiety about the Fed’s decision, possibly expecting a neutral outcome. Supporting this view, CME Group’s FedWatch tool indicates a 99% probability that the Fed will maintain rates at 4.25%–4.50%.

If the rates remain unchanged, it is possible that Bitcoin price will continue its current downtrend. This may be exactly what the HyperLiquid whale was hoping for when it opened a 40x leveraged short position worth over $500 million at its peak. However, this position is now closed.

Related: Bitcoin stalls under $85K— Key BTC price levels to watch ahead of FOMC

How are the spot Bitcoin ETFs reacting?

Unlike Bitcoin whales, investors in the spot Bitcoin ETFs have historically offloaded BTC holdings before FOMC meetings. 

Since the spot BTC ETFs launched in January 2024, most FOMC events have coincided with ETF outflows or, at best, modest inflows, according to CoinGlass data. The notable exception was the previous all-time high of January 2025, when even the spot Bitcoin ETF investors couldn’t resist the urge to buy.

Spot Bitcoin ETF net inflows and FOMC dates. Source: Marie Poteriaieva, CoinGlass

On March 17, the spot Bitcoin ETFs saw $275 million in net inflows, marking a shift from a month of outflows. This may signal a shift in investor sentiment and expectations regarding the Fed’s policy decisions.

If spot ETF inflows are rising before the FOMC, investors might be anticipating a more dovish stance from the Fed, such as signaling future rate cuts or maintaining liquidity-friendly policies.

Investors could also be loading up on Bitcoin as a hedge against uncertainty. This suggests that some institutional investors believe Bitcoin will perform well regardless of the Fed’s decision.

Investors could also be anticipating a possible short squeeze. If traders were expecting Bitcoin to drop and positioned short, a sudden increase in ETF inflows could play a role in traders’ behaviors and trigger a short squeeze.

Following the FOMC, BTC’s price action, along with onchain data and spot ETF flows will show whether the recent activity was part of a long-term accumulation trend or just speculative positioning. 

However, one thing that many traders agree on now is that BTC could experience a significant price movement after the FOMC announcement. As crypto trader Master of Crypto put it in a recent X post: 

“The FOMC is tomorrow, and a Big Move is expected.” 

Even without rate cuts, the chance of the Fed issuing dovish statements could lift markets, while the absence of them could drive prices lower.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Institutional investors are increasingly bullish on cryptocurrency, with 83% saying they plan to up crypto allocations in 2025, according to a March 18 report by Coinbase and EY-Parthenon. 

Already, nearly three-quarters of firms surveyed said they hold cryptocurrencies other than Bitcoin (BTC) and Ether (ETH), and a “significant majority” said they plan to boost crypto allocations to 5% or more of their portfolios, the report said. 

They are motivated by the view that “cryptocurrencies represent the best opportunity to generate attractive risk-adjusted returns over the next three years,” according to the report.

Coinbase, the US’ largest crypto exchange, and EY-Parthenon, a consultancy, based the findings on interviews with more than 350 institutional investors in January. 

Among institutional altcoin holdings, XRP (XRP) and Solana (SOL) are the most popular, the survey found. 

Coinbase and EY-Parthenon surveyed more than 350 financial institutions on crypto. Source: Coinbase

Related: Stablecoin adoption, ETFs to propel crypto performance in 2025: Citi

Altcoin ETFs incoming

Altcoin holdings could rise even further if US regulators approve planned exchange-traded fund (ETF) listings this year.

Asset managers are awaiting a greenlight from the US Securities and Exchange Commission to list more than a dozen proposed altcoin ETFs. 

Litecoin (LTC), SOL and XRP are seen as the most likely to see near-term approval, according to Bloomberg Intelligence. 

On March 17, the Chicago Mercantile Exchange (CME) Group, the largest US derivatives exchange by volume, launched futures contracts tied to SOL, marking a significant step toward institutional adoption of the altcoin. 

Stablecoins and DeFi take off

Meanwhile, stablecoins continue to see institutional uptake, with 84% of respondents either holding stablecoins or exploring doing so, the survey found. 

According to the report, institutions are using “stablecoins for a variety of use cases beyond just facilitating crypto transactions, including generating yield (73%), foreign exchange (69%), internal cash management (68%), and external payments (63%).”

In December, investment bank Citi said stablecoin adoption will accelerate onchain activity, including in decentralized finance (DeFi). 

The survey found that only 24% of institutional investors currently use DeFi platforms, but that figure is expected to grow to nearly 75% in the next two years. 

“Institutions are attracted to DeFi for myriad reasons, citing derivatives, staking, and lending as the use cases they are most interested in, followed closely by access to altcoins, crossborder settlements, and yield farming,” the report said.

Magazine: Bitcoin dominance will fall in 2025: Benjamin Cowen, X Hall of Flame

US Representative Ro Khanna, a Democrat from California, said at the Digital Assets Summit on March 18 that Congress “should be able to get” both a stablecoin and crypto market structure bill done this year.

Khanna added that there are 70 to 80 Democrats now who understand the importance of stablecoin legislation in increasing American influence around the world by giving more people access to dollars.

Rep. Ro Khanna (right) at the Digital Assets Summit, March 18. Source: Cointelegraph

Stablecoins are a growing crypto use case, especially in developing countries where there is limited access to physical dollars. There are currently stablecoin bills making their way through both chambers of Congress, including the GENIUS Act in the Senate.

As for a crypto market structure bill, Khanna noted the Financial Innovation and Technology for the 21st Century Act, also known as FIT21, which he worked on with former Representative Patrick McHenry. “I understand that there has to be some tinkering to that,” Khanna said, “but a basic market structure bill should emerge.”

Executives in crypto have said that the industry will benefit more from US regulatory clarity surrounding digital assets than even the strategic Bitcoin reserve. At this time of writing, cryptocurrency prices, including for Bitcoin (BTC), have fallen since the signing of US President Donald Trump’s executive order creating the reserve.

Related: Banks push to block stablecoin legislation over market share fears

Khanna critical of the president’s memecoin

As enthusiastic as Khanna was about Congress passing stablecoin and crypto market regulation bills this year, he was equally critical about President Trump’s memecoin, Official Trump (TRUMP).

“I’ll say this just to challenge folks,” Khanna said. “I’ve been a supporter of blockchain, of crypto technology, but I criticize this idea of the president having a memecoin. I don’t think any elected official should be having a memecoin, and those types of things, in my view, distract from the fundamental technology and making the case.”

He added, “We have to recognize that those types of things are not helpful in convincing the American public that there’s an underlying technology that is valuable.”

Related: What is TRUMP? Donald Trump’s billion-dollar memecoin

President Trump’s memecoin and his family’s crypto ventures may raise conflict-of-interest concerns, and California Representative Maxine Waters has said the infamous memecoin potentially opened the door to corruption and may risk national security.

California Representative Sam Liccardo has introduced a bill that would make it illegal for US presidents, members of Congress, senior government officials, and their spouses and children to issue or sponsor commodities, securities or cryptocurrencies.

Magazine: X Hall of Flame: Memecoins will die and DeFi will rise again — Sasha Ivanov

Bo Hines, the executive director of the President’s Council of Advisers on Digital Assets, said comprehensive stablecoin legislation is expected to be finalized in the coming months, underscoring the government’s urgency to maintain the US dollar’s dominance in onchain activity. 

Speaking at the Digital Asset Summit in New York on March 18, Hines said stablecoin legislation is “imminent” following the Senate Banking Committee’s approval of the GENIUS Act last week. 

The GENIUS Act, which is an acronym for Guiding and Establishing National Innovation for US Stablecoins, establishes collateralization guidelines for stablecoin issuers and requires full compliance with Anti-Money Laundering laws. 

“We saw that vote come out of the Senate Banking Committee in extremely bipartisan fashion, […] which was fantastic to see,” said Hines, adding:

“I think our colleagues on the other side of the aisle also recognize the importance for US dominance in this space, and they’re willing to work with us here, and that’s what’s really exciting about this. You know, there’s not many issues in Washington, DC, in which folks can come together from both sides of the aisle and really propel the United States forward in a way that’s comprehensive.”

Bo Hines (right) speaking at the Digital Asset Summit on March 18. Source: Cointelegraph

When asked about when stablecoin legislation will be passed, Hines said, “I think that stables could be on the president’s desk here in the next two months.”

Right now, the market seems to be underestimating what this bill “could do for the US economy in terms of US dollar dominance, in terms of payment rails, in terms of altering the course of financial markets,” said Hines.

Related: Banks push to block stablecoin legislation over market share fears

Extending the dollar’s hegemony

The US dollar accounts for the vast majority of the $230 billion worth of stablecoins in circulation, suggesting that the greenback remains the currency of choice for funding cryptocurrency accounts and sending remittances overseas. 

Some industry experts believe this will change in the future as stablecoins become multicurrency, but so far, digital dollars remain the overwhelming favorite.

Dollar-denominated stablecoins dominate the market. Source: DefiLlama

US Treasury Secretary Scott Bessent said the Trump administration will use stablecoins to maintain the dollar’s status as the global reserve currency, which partly explains the sense of urgency to push legislation over the finish line.

“We are going to put a lot of thought into the stablecoin regime, and as President Trump has directed, we are going to keep the US [dollar] the dominant reserve currency in the world, and we will use stablecoins to do that,” Bessent told the White House Crypto Summit on March 7.

Treasury Secretary Scott Bessent pictured alongside President Donald Trump at the White House Crypto Summit on March 7. Source: The Associated Press

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Bo Hines, the executive director of the President’s Council of Advisers on Digital Assets, said comprehensive stablecoin legislation is expected to be finalized in the coming months, underscoring the government’s urgency to maintain the US dollar’s dominance in onchain activity. 

Speaking at the Digital Asset Summit in New York on March 18, Hines said stablecoin legislation is “imminent” following the Senate Banking Committee’s approval of the GENIUS Act last week. 

The GENIUS Act, which is an acronym for Guiding and Establishing National Innovation for US Stablecoins, establishes collateralization guidelines for stablecoin issuers and requires full compliance with Anti-Money Laundering laws. 

“We saw that vote come out of the Senate Banking Committee in extremely bipartisan fashion, […] which was fantastic to see,” said Hines, adding:

“I think our colleagues on the other side of the aisle also recognize the importance for US dominance in this space, and they’re willing to work with us here, and that’s what’s really exciting about this. You know, there’s not many issues in Washington, DC, in which folks can come together from both sides of the aisle and really propel the United States forward in a way that’s comprehensive.”

Bo Hines (right) speaking at the Digital Asset Summit on March 18. Source: Cointelegraph

When asked about when stablecoin legislation will be passed, Hines said, “I think that stables could be on the president’s desk here in the next two months.”

Right now, the market seems to be underestimating what this bill “could do for the US economy in terms of US dollar dominance, in terms of payment rails, in terms of altering the course of financial markets,” said Hines.

Related: Banks push to block stablecoin legislation over market share fears

Extending the dollar’s hegemony

The US dollar accounts for the vast majority of the $230 billion worth of stablecoins in circulation, suggesting that the greenback remains the currency of choice for funding cryptocurrency accounts and sending remittances overseas. 

Some industry experts believe this will change in the future as stablecoins become multicurrency, but so far, digital dollars remain the overwhelming favorite.

Dollar-denominated stablecoins dominate the market. Source: DefiLlama

US Treasury Secretary Scott Bessent said the Trump administration will use stablecoins to maintain the dollar’s status as the global reserve currency, which partly explains the sense of urgency to push legislation over the finish line.

“We are going to put a lot of thought into the stablecoin regime, and as President Trump has directed, we are going to keep the US [dollar] the dominant reserve currency in the world, and we will use stablecoins to do that,” Bessent told the White House Crypto Summit on March 7.

Treasury Secretary Scott Bessent pictured alongside President Donald Trump at the White House Crypto Summit on March 7. Source: The Associated Press

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Binance CEO Richard Teng denied reports that Binance.US was in deal talks with entities affiliated with US President Donald Trump during a March 18 panel at Blockworks’ 2025 Digital Asset Summit in New York.

Teng’s statement reiterated the position taken by Binance’s founder, Changpeng “CZ” Zhao, and Trump, both of whom denied the story last week.

On March 13, The Wall Street Journal reported that Binance.US, an independently-operated US cryptocurrency exchange, was discussing selling an equity interest to Trump-affiliated business entities, including a possible deal with World Liberty Financial, the Trump family’s decentralized finance (DeFi) project. 

“I believe both World Liberty Financial as well as CZ himself have tweeted and denied the reforms, right? So that there’s really nothing else to add,” Teng said during the summit, which was attended by Cointelegraph. 

Richard Teng speaking at Blockworks’ Digital Asset Summit in New York. Source: Cointelegraph

Related: Donald Trump’s memecoin generated $350M for creators: Report

Teng stated that Binance.US is legally and operationally distinct from its larger namesake. 

“US and dotcom are quite different animals, right? They have different set of shareholders, they have different board of directors and different CEO running the show,” he said. 

However, Teng did praise Trump, saying that Binance has benefited from the president’s “pro-crypto” policies despite not directly operating in the US. 

“Last year was a landmark year in that institutions are finally coming on board,” Teng said. 

“With President Trump coming out with both [a] strategic crypto reserve or asset stockpile, it will force governments around the world […] to look at this space quite seriously.”

In a departure from his predecessor, Joe Biden, Trump has said he wants to make America the “world’s crypto capital” and has appointed pro-industry leadership to key regulatory posts.

Source: CZ

Potential conflicts of interest

Citing sources familiar with the matter, The Wall Street Journal report mentioned that CZ — who served four months in prison in the US — has been pushing for the Trump administration to grant him a pardon.

“It is unclear what form the Trump family stake would take if the deal comes together or whether it would be contingent on a pardon,” the report said.

Binance is the world’s largest cryptocurrency exchange, but Binance.US lags Coinbase in the US market. 

CZ denied the report in an X post published the same day. Trump also denied the report in a post on Truth Social, his social media platform. 

“The Globalist Wall Street Journal has no idea what they are doing or saying. They are owned by the polluted thinking of the European Union, which was formed for the primary purpose of ‘screwing’ the United States of America,” the president wrote.

Trump’s Jan. 18 memecoin launch and his ties to crypto firm World Liberty Financial have upturned norms for US presidents and raised concerns about potential conflicts of interest, experts have said. 

Magazine: Trump’s crypto ventures raise conflict of interest, insider trading questions

Ethereum’s native token, Ether (ETH), has ventured into oversold territory multiple times against Bitcoin (BTC) in recent months, but the altcoin has yet to show any signs of finding a price bottom. The trading situation is actually quite similar to a previous scenario, and ETH’s market structure suggests that it could repeat itself in Q2 to Q3 of this year.

Ether’s repeat breakdowns point to more downside

The relative strength index (RSI) on ETH’s 3-day timeframe remains below 30, a level that typically signals a potential bounce.

However, historical patterns show that previous dips into oversold conditions have failed to mark a definitive bottom. Each instance has been followed by another leg lower, reflecting persistent bearish momentum.

ETH/BTC three-day price chart. Source: TradingView

Since mid-2024, the ETH/BTC pair has undergone repeat breakdowns, with losses of around 13%, 21%, 25%, and 19.5% occurring in rapid succession. Moreover, the 50-day and 200-day EMAs are trending lower, confirming the lack of bullish strength.

X-based market analyst @CarpeNoctom highlighted ETH’s negative price performance, noting that the ETH/BTC pair has failed to confirm a bullish divergence—when the price makes lower lows but the RSI makes higher lows—on its weekly chart.

ETH/BTC weekly price chart. Source: TradingView/CryptoNoctom

ETH ETF outflows and onchain data hint at further weakness

The “cursed” ETH/BTC downtrend stands out when compared to the broader crypto market. This includes persistent outflows witnessed across the US-based spot ETH ETFs, as well as negative onchain data.

The net flows into the spot Ether ETFs have dropped 9.8% in March to $2.54 billion. In comparison, the spot Bitcoin ETF net flows are down 2.35% in the same period to $35.74 billion.

Source: Ted Pillows

Meanwhile, Ethereum’s gas fees—measured by daily median gas consumption on mainnet—were sitting around 1.12 GWEI as of March, down by nearly 50 times what they were just a year ago.

Ethereum median gas fees vs. ETH price (in dollar terms). Source: Nansen

“Despite the second rally of ETH price into 2024 year end, activity on mainnet as measured by gas consumption never fully recovered,” data analytics platform Nansen wrote in its latest report, adding:

“This is downstream of a few things but much of the activity has shifted to Solana and L2s over 2024.”

Nansen argued that they remain cautiously bearish on ETH due to its unfavorable risk/reward ratio compared to BTC and lower-valued altcoins with niche market focus.

A lack of demand for ETH relative to Bitcoin is further visible in its future volume data.

Notably, Bitcoin futures volume has rebounded 32% from its Feb. 23 lows, reaching $57 billion on March 18. In comparison, ETH’s trading activity remains mostly flat, according to onchain data platform Glassnode.

Bitcoin, Ethereum, and Solana futures volume. Source: Glassnode

The ETH/BTC pair could drop another 15%

ETH/BTC pair is forming a bear pennant pattern on the daily chart, characterized by a period of consolidation within converging trendlines forming after a steep decline.

Related: Standard Chartered drops 2025 ETH price estimate by 60% to $4K

A bear pennant technically resolves when the price drops below the lower trendline and falls by as much as the previous downtrend’s height. Applying the same rule on ETH/BTC brings its downside target for April to 0.01968 BTC, down 15% from the current levels.

ETH/BTC daily price chart. Source: TradingView

Furthermore, the 50-day and 200-day EMAs remain in a sharp downward trajectory, with the ETH/BTC pair trading far below these key levels, signaling a persistent bear market structure.

Despite the looming downside risk, a bullish invalidation could occur if ETH/BTC breaks above the pennant’s upper resistance and flips the 50-day EMA into support.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

ARK Invest CEO Cathie Wood believes the White House is underestimating the recession risk facing the US economy stemming from US President Donald Trump’s tariff policies — an oversight that will eventually force the president and Federal Reserve to enact pro-growth policies.

Speaking virtually at the Digital Asset Summit in New York on March 18, Wood said US Treasury Secretary Scott Bessent isn’t worried about a recession. 

However, Wood said, “We are worried about a recession,” adding, “We think the velocity of money is slowing down dramatically.”

Cathie Wood speaks virtually at the Digital Asset Summit. Source: Cointelegraph

A slowdown in the velocity of money means capital is changing hands less frequently, which is typically associated with a recession, as consumers and businesses spend and invest less money. 

“I think what’s happening, though, is that if we do have a recession, declining GDP, that this is going to give the president and the Fed many more degrees of freedom to do what they want in terms of tax cuts and monetary policy,” said Wood. 

Investors believe the first domino could fall in the coming months when the Fed puts an end to its quantitative tightening program — something bettors on Polymarket believe is 100% certain to happen before May.

Meanwhile, expectations for multiple rate cuts by the Fed in the second half of the year are growing, according to CME Group’s Fed Fund futures prices.

The probability of rates being lower than they are now by the Fed’s June 18 meeting is nearly 65%. Source: CME Group

Related: As Trump tanks Bitcoin, PMI offers a roadmap of what comes next

Focus remains long term

ARK and Cathie Wood have been active cryptocurrency investors for many years. ARK and 21Shares’ spot Bitcoin (BTC) exchange-traded fund (ETF) was approved on Jan. 11, 2024, and currently has more than $3.9 billion in net assets, according to Yahoo Finance data. 

Spot Bitcoin ETFs have recorded heavy outflows in recent weeks, but the overall trend shows investors are holding their positions. Source: Farside

ARK also offers crypto portfolio solutions to wealth managers through its partnership with Eaglebrook Advisors. 

Wood told the New York Digital Asset Summit that “long-term innovation wins as we go through these trials and tribulations,” referring to the recent market correction. 

When asked if crypto assets remain an “investable arc” over the long term, Wood said this strategy was the cornerstone of ARK’s investment approach. 

“[W]e’ve built out positions in more than just the big three,” she said, referring to Bitcoin, Ether (ETH) and Solana (SOL).

This long-term arc is being supported by favorable regulations, which have improved the investment landscape dramatically. 

Pro-crypto policy changes are “giving institutions the green light, and if you look at our studies as long ago as 2016, we wrote a paper called ‘Bitcoin: Ringing the Bell for a New Asset Class,’ and, yet many institutions just dismissed it out of hand,” said Wood.

Now, institutions are looking at ARK’s studies and saying they “have a fiduciary responsibility to expose [their] clients to a new asset class.”

Magazine: Bitcoin ETFs make Coinbase a ‘honeypot’ for hackers and governments — Trezor CEO

The decentralized finance (DeFi) landscape continues to evolve, and Bitcoin-centric solutions are gaining momentum. BTCFi is an emerging sector that transforms Bitcoin (BTC) from a passive store of value into an actively utilized asset in DeFi. 

A new report by Cointelegraph Research and Elastos delves into how Bitcoin’s security helps to create trustless, scalable financial ecosystems.

Bitcoin’s expanding role in DeFi

DeFi has traditionally been dominated by Ethereum, which accounts for over 50% of the sector’s total $175 billion total value locked (TVL). However, Bitcoin’s strong security and liquidity make it an attractive foundation for DeFi innovation.

Despite its strengths, Bitcoin’s lack of native smart contract functionality has historically limited its role in decentralized finance. The emergence of Bitcoin-centric DeFi solutions aims to bridge this gap and enable Bitcoin holders to participate in lending, stablecoin issuance and crosschain interoperability without custodial risks.

Elastos: Leveraging Bitcoin’s security for decentralized applications

Elastos stands out as one of the leading players in this evolution by incorporating merged mining, a method that allows secondary blockchains to inherit Bitcoin’s security. 

Because approximately 50% of Bitcoin’s total 800 EH/s hashrate secures Elastos, the platform is positioned as one of the most computationally robust Bitcoin-linked networks. This ensures that financial applications built on Elastos maintain a level of security akin to that of Bitcoin itself.

At the core of Elastos’ infrastructure is its Elastic Consensus model, a hybrid mechanism that integrates auxiliary proof-of-work, bonded proof-of-stake, and proof-of-integrity. 

This multi-layered approach enables Elastos to provide secure, scalable financial services and enhances its appeal for DeFi applications. The Elastos Smart Chain, an Ethereum Virtual Machine-compatible sidechain, facilitates the development of decentralized applications (DApps) to ensure seamless integration with the broader DeFi ecosystem.

BeL2: A breakthrough for BTCFi

A major highlight of the report is the BeL2 Arbiter Network, designed to bring trustless Bitcoin transactions into DeFi. BeL2 leverages zero-knowledge proofs (ZKPs) to verify Bitcoin transactions on the Elastos and Ethereum networks without relying on centralized custodians. 

This mechanism allows Bitcoin to be used in DeFi protocols without synthetic assets or intermediaries and addresses a long-standing challenge in BTCFi.

This model has already attracted institutional interest. An initiative led by students and alumni of Harvard University is developing a BTC-backed stablecoin using BeL2. The platform also supports decentralized lending that allows Bitcoin holders to collateralize loans in stablecoins while retaining exposure to BTC’s price appreciation.

Elastos’ market position and future potential

Elastos’ BTCFi approach competes with established Bitcoin DeFi solutions such as Stacks and Rootstock. Stacks primarily benefits from Bitcoin finality, and Rootstock focuses on EVM compatibility, while Elastos distinguishes itself by combining high security (via merged mining) and crosschain interoperability. This positions Elastos as a formidable player in the BTCFi landscape.

However, the report also identifies some challenges, such as regulatory uncertainties, ecosystem awareness and some technical complexities. Despite these hurdles, Elastos’ combination of Bitcoin security, trustless smart contract execution and institutional backing positions it for potential growth in the evolving BTCFi sector.

Challenges and opportunities in Bitcoin DeFi adoption

As the blockchain industry shifts toward crosschain interoperability and decentralized governance, Bitcoin-secured assets are expected to play an important role in reshaping both traditional and decentralized finance.

Elastos’ innovations, particularly through BeL2 and its decentralized identity (DID) framework, aim to enhance the security, scalability and institutional adoption of Bitcoin in DeFi. 

With Bitcoin-secured finance projected to expand significantly, Elastos’ infrastructure provides a robust foundation for the next wave of decentralized financial applications.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Cointelegraph does not endorse the content of this article nor any product mentioned herein. Readers should do their own research before taking any action related to any product or company mentioned and carry full responsibility for their decisions.

The decentralized finance (DeFi) landscape continues to evolve, and Bitcoin-centric solutions are gaining momentum. BTCFi is an emerging sector that transforms Bitcoin (BTC) from a passive store of value into an actively utilized asset in DeFi. 

A new report by Cointelegraph Research and Elastos delves into how Bitcoin’s security helps to create trustless, scalable financial ecosystems.

Bitcoin’s expanding role in DeFi

DeFi has traditionally been dominated by Ethereum, which accounts for over 50% of the sector’s total $175 billion total value locked (TVL). However, Bitcoin’s strong security and liquidity make it an attractive foundation for DeFi innovation.

Despite its strengths, Bitcoin’s lack of native smart contract functionality has historically limited its role in decentralized finance. The emergence of Bitcoin-centric DeFi solutions aims to bridge this gap and enable Bitcoin holders to participate in lending, stablecoin issuance and crosschain interoperability without custodial risks.

Elastos: Leveraging Bitcoin’s security for decentralized applications

Elastos stands out as one of the leading players in this evolution by incorporating merged mining, a method that allows secondary blockchains to inherit Bitcoin’s security. 

Because approximately 50% of Bitcoin’s total 800 EH/s hashrate secures Elastos, the platform is positioned as one of the most computationally robust Bitcoin-linked networks. This ensures that financial applications built on Elastos maintain a level of security akin to that of Bitcoin itself.

At the core of Elastos’ infrastructure is its Elastic Consensus model, a hybrid mechanism that integrates auxiliary proof-of-work, bonded proof-of-stake, and proof-of-integrity. 

This multi-layered approach enables Elastos to provide secure, scalable financial services and enhances its appeal for DeFi applications. The Elastos Smart Chain, an Ethereum Virtual Machine-compatible sidechain, facilitates the development of decentralized applications (DApps) to ensure seamless integration with the broader DeFi ecosystem.

BeL2: A breakthrough for BTCFi

A major highlight of the report is the BeL2 Arbiter Network, designed to bring trustless Bitcoin transactions into DeFi. BeL2 leverages zero-knowledge proofs (ZKPs) to verify Bitcoin transactions on the Elastos and Ethereum networks without relying on centralized custodians. 

This mechanism allows Bitcoin to be used in DeFi protocols without synthetic assets or intermediaries and addresses a long-standing challenge in BTCFi.

This model has already attracted institutional interest. An initiative led by students and alumni of Harvard University is developing a BTC-backed stablecoin using BeL2. The platform also supports decentralized lending that allows Bitcoin holders to collateralize loans in stablecoins while retaining exposure to BTC’s price appreciation.

Elastos’ market position and future potential

Elastos’ BTCFi approach competes with established Bitcoin DeFi solutions such as Stacks and Rootstock. Stacks primarily benefits from Bitcoin finality, and Rootstock focuses on EVM compatibility, while Elastos distinguishes itself by combining high security (via merged mining) and crosschain interoperability. This positions Elastos as a formidable player in the BTCFi landscape.

However, the report also identifies some challenges, such as regulatory uncertainties, ecosystem awareness and some technical complexities. Despite these hurdles, Elastos’ combination of Bitcoin security, trustless smart contract execution and institutional backing positions it for potential growth in the evolving BTCFi sector.

Challenges and opportunities in Bitcoin DeFi adoption

As the blockchain industry shifts toward crosschain interoperability and decentralized governance, Bitcoin-secured assets are expected to play an important role in reshaping both traditional and decentralized finance.

Elastos’ innovations, particularly through BeL2 and its decentralized identity (DID) framework, aim to enhance the security, scalability and institutional adoption of Bitcoin in DeFi. 

With Bitcoin-secured finance projected to expand significantly, Elastos’ infrastructure provides a robust foundation for the next wave of decentralized financial applications.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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