2024 has ushered in numerous tailwinds for the crypto sector, particularly for Bitcoin.

At the forefront is the long-anticipated launch of the spot Bitcoin Exchange Traded Funds (ETFs) that debuted earlier this year. These Bitcoin ETFs have emerged as one of the most successful ETF introductions in recent times, amassing over $100 billion in assets under management in under a year.

Moreover, with the new administration in the United States demonstrating a clear pro-crypto stance, we are witnessing a significant shift in regulatory attitudes, paving the path for Bitcoin to compete more fairly with other similar assets.

Another crucial turning point is the upcoming resignation of SEC chair Gary Gensler, who was known for his aggressive and anti-innovation approach, taking legal action against reputable crypto companies like Uniswap, Consensys, and Coinbase, all while neglecting to address the actual criminal activities that persist in the industry’s shadows.

To gain a clearer insight into the current developments surrounding digital gold, we will compare the situation to a typical fight night, illustrating why we are approaching the final phases of a main event just as the underdog prepares to deliver a surprise knockout.

*DING*
*DING*
*DING*

It’s Bitcoin Fight Night.

Weigh-in

Before any professional fighter enters the ring or octagon, they undergo the rigorous process of cutting weight to make the weigh-in. For Bitcoin, this process was marked by the launch of ETFs, signaling its readiness to enter the arena.  

Up until recently, Bitcoin has largely been relegated to the amateur leagues. That all changed with the approval of BTC ETFs, which allowed the blockchain prime-mover to compete for allocations directly with other major financial assets.

Its “Wall Street weigh-in” was an unmistakable success as ETFs received record inflows and even more substantial attention from the traditional financial commentariat.

With the stage set and all the fighters making weight, fight night was just one sleep away.

Prelims

While the weigh-in showcased Bitcoin’s readiness, it wasn’t the fight itself. The first stage of this multi-pronged war occurred at the polls as Bitcoin-friendly candidates handily defeated their opponents.

These prelim rounds demonstrated that Bitcoin is not some sideshow. Instead, it’s an undeniable force that detractors can attempt to silence at their own political peril.

Bitcoin’s momentum during these elections is one crucial, yet ultimately table-stakes proof point of its staying power. Simple promises of fair treatment gave Bitcoin a surge of legitimacy, fueling hype that pushed it past previous all-time highs.

Now, the crowd is roaring, and the main card is about to begin.

Main card

As we’re entering the main card and the big fight nears, Bitcoin is still perceived as an underdog, yet the air is certainly thicker with excitement for its potential.

Thanks to the new administration, regulations will inevitably shift toward a friendlier environment, opening the doors for adoption and growth not only for Bitcoin itself but also for other financial products built on top of this asset, and you bet Wall Street will use every trick in the toolbox to maximize gains.

The next four years are set to be monumental for Bitcoin. With a regulatory landscape shifting from hostile to friendly, Bitcoin adoption is poised for radical growth.

The funny thing is, Bitcoin’s builders and the broader crypto space don’t even need to make massive strides — just having a level playing field is enough to make a world of difference.

Replacing adversarial policies with a more cooperative approach will remove barriers that have held Bitcoin back. The main card promises an environment where Bitcoin can thrive organically without unnecessary friction.

Co-main event

As exciting as regulatory victories are, they’d ultimately be a disappointment without innovation stacked on top, like a fight night with a solid undercard yet disappointing headliners.

Everyone knows that the co-main event is where a fight night's success is first truly solidified.

Institutions, in particular, will not be satisfied with spot BTC ETFs and regulatory parity. They’ll need more, and the next big step is clear: Bitcoin needs to offer native yield.

The whales on Wall Street need more than HODLing. They’ve been trained to crave low-risk, yield-bearing opportunities that align with traditional financial strategies. Yield-bearing assets have been a cornerstone of financial markets for decades.

Consider these examples:

• Dividend-paying stocks and bonds have historically outperformed non-yielding assets. From 1930 to 2021, dividends contributed 40% to the S&P 500's total returns. (Source)
• During the volatile 2000s, dividends provided a 1.8% annualized return, cushioning the overall negative performance of the S&P 500. (Source)
• Non-dividend-paying stocks, in contrast, rose just 2.34% over 41 years, lagging far behind their yield-bearing counterparts. (Source)

Bitcoin, however, has historically lacked secure, native yield. Its proof-of-work consensus and finite supply have made yield generation nearly impossible without taking on meaningful risk (study Celsius).

Thankfully, Bitcoin innovation has come a long way with a solution to this problem: Non-custodial Bitcoin staking.

Non-custodial Bitcoin staking is enabled by the Core blockchain, the proof-of-stake layer for Bitcoin, which allows BTC holders to earn rewards without giving up custody of their coins.

With Core, holders can lock their BTC on the Bitcoin blockchain in exchange for the right to participate in Core’s validator election process. By electing honest validators, Bitcoin stakers earn rewards without sacrificing ownership of their private keys or otherwise taking on new trust assumptions.

Once the regulatory landscape clears and Wall Street discovers a trustless way to earn yield on its Bitcoin, excitement levels can be expected to ramp up even further.

Ultimately, this innovation doesn’t just address Wall Street’s demands — it transforms Bitcoin’s value proposition. No longer merely a passive store-of-value, Bitcoin becomes a yield-bearing asset, enhancing the security of external systems — a surefire KO of Bitcoin’s “pet rock” detractors.

And now, the moment you’ve all been waiting for has arrived.

The main event and the introduction of BTCFi

The main event brings us to Bitcoin DeFi (BTCFi), a new paradigm for institutions, where Bitcoin evolves into a fully-fledged financial ecosystem, complete with derivatives and decentralized applications, solidifying its place as the backbone of a transformative financial era.

BTCFi is an end-to-end Bitcoin-centric financial ecosystem built entirely on Bitcoin-secured blockchain rails. The ultimate goal is a world where Bitcoin gains all the utility offered to traditional financial assets while remaining fully self-custodied on-chain.

BTCFi isn’t just about appealing to crypto-natives. It’s the key to unlocking Wall Street’s true potential. While ETFs and yields are compelling, they pale in comparison to what Wall Street really craves: derivatives and sophisticated financial instruments.

The global derivatives market, with a notional value exceeding $1 quadrillion, dwarfs the spot market. BTCFi brings this world on-chain, leveraging Bitcoin’s native security and emerging yield capabilities.

The future for BTCFi with Core

Taking a step back from TradFi, consider BTCFi’s current potential within the DeFi landscape. For example, Ethereum boasts a $372 billion market cap with $57 billion locked in DeFi, i.e. about 15% of its value.

Bitcoin, by contrast, has a staggering $1.8 trillion market cap, but only $2.5 billion is utilized within DeFi, i.e. ~0.1%. If Bitcoin achieves a similar ratio to Ethereum’s, BTCFi could unlock $270 billion in TVL, fueling even greater adoption and value. Now, picture the potential growth of BTCFi when Bitcoin hits 10x its current valuation.

CoreFi strategy incorporates Bitcoin yield into MicroStrategy's well-known "HODL-borrow-HODL-repeat" model.

By adding staking to the cycle — HODL-stake-borrow-HODL-repeat — the CoreFi Strategy enhances returns and expands the potential for BTCFi.

While MicroStrategy’s approach achieved a remarkable increase in stock value, Core’s strategy aims to exceed that by utilizing its dual-staking innovation and focusing on sustainable growth opportunities. This strategy establishes itself as the premier option for optimized exposure to BTCFi, blending tried-and-true methods with advanced yield dynamics.

From on-chain derivatives protocols to decentralized applications, BTCFi has the potential to complete Bitcoin’s evolution from a store-of-value asset to a medium of exchange.

But to make that a reality, we are turning our eyes to the stablecoin — not the algorithmic type that goes to zero nor the sketchy one with questionable reserves. We’re talking about one that’s backed by the most pristine collateral in mankind's history.

Bitcoin-backed stablecoins: Bridging Bitcoin’s future

Stablecoins are arguably one of the most important use cases to emerge from the crypto space. Unlike traditional fiat rails, blockchains allow fiat-denominated money to move seamlessly across borders within seconds. Stablecoins' seamless and permissionless features have allowed them to attain transaction volumes double than that of PayPal and Visa.

While that is an astonishing achievement, imagine a future where you could convert your crypto into stablecoins without losing your precious Bitcoin. Sounds like the holy grail, doesn’t it?

Bitcoin-backed stablecoins are poised to transform Bitcoin from a store-of-value asset to a true medium of exchange, bridging the gap between Bitcoin's inflation resistance and fiat’s day-to-day practicality.

These stablecoins allow users to save in Bitcoin while spending in fiat without leaving blockchain rails. By borrowing stablecoins against their Bitcoin holdings, users avoid selling BTC for short-term needs.

Innovations like Liquid Staked Bitcoin (LstBTC) further enhance this model by generating yield while Bitcoin backs stablecoins. Ultimately, Bitcoin-backed stablecoins offer a minimally extractive, practical solution for on-chain finance, accelerating Bitcoin’s evolution into a dominant financial ecosystem.

Own Bitcoin. Rent fiat.

Concluding thoughts

With Bitcoin gaining increasing popularity and demand from institutions, it’s essential to understand that those same institutions will want to maximize their returns. What’s clear as day is that they won’t gamble away on illiquid memecoins or participate in obscene DeFi looping mechanisms.

The path is clear — keep as much Bitcoin as possible while still squeezing out extra risk-adjusted revenue. That comes with two non-negotiables: maintaining custody over their Bitcoin and having clear risk parameters for any product they interact with.

By participating in Core’s BTCFi, institutions can keep custody of their Bitcoin while participating in the Bitcoin economy, whether lending to acquire stablecoins or staking their Bitcoin for extra revenue.

Once we begin to see regulations sway in favor of digital assets, Bitcoin and its underlying economy will be the first to prosper, and Core will be the leading infrastructure provider to fulfill the needs of everyone, whether you’re an independent investor or the Wolf of Wall Street himself.

P.S.

Special thanks to Kieran Dennis from Core DAO for providing the fight night analogy and contributing to the drafting of this article.