Institutional Bitcoin
BTC0.23% holders started 2025 with Bitcoin trading around $94,000. By October, they watched it surge to an all-time high of $126,200, a move that validated the macro thesis for digital scarcity and institutional adoption. Corporate treasuries that held through the volatility, miners that resisted selling, and funds that stayed allocated all captured that appreciation on paper.
- Bitcoin’s 2025 round-trip exposed a hidden tax on institutions: Prices ended flat-to-down, but custody fees quietly turned conviction into negative returns.
- Idle BTC is now a strategic failure, not a neutral choice: Bitcoin-native yield infrastructure matured in 2025, offering 2–7% APY without wrapping, selling, or adding centralized risk.
- The next phase is balance-sheet optimization: Institutions and miners that pair BTC exposure with native yield can offset custody drag and generate returns — regardless of price direction.
Then they gave it all back. Bitcoin currently trades near $85,000, below where it started the year. Institutions that rode the wave up and down are now sitting on year-to-date returns below zero. But while the price went nowhere, the costs kept accumulating. Qualified custody fees ran between 10 and 50 basis points all year. Yield opportunities sat untapped. The round-trip cost real money.
At the scale of the largest corporate holders (600,000+ BTC), the opportunity cost of leaving that capital idle is massive. Across the industry’s ~2 million institutional BTC (held by corporate treasuries, private companies, and governments), aggregate custody costs often ranged from more than $100 million to close to $1 billion. For positions that ended the year flat, those fees represent a pure loss. Had these positions utilized Bitcoin-native yield infrastructure, they could have offset custody costs and generated positive returns.
The question facing treasuries now isn’t whether Bitcoin works as a store of value. The question is whether flat performance minus custody fees represents an acceptable outcome when infrastructure exists to change the equation.
What custody actually costs
Qualified custody requirements for institutional Bitcoin holders mandate fees running 10-50 basis points annually. These are rarely negotiable costs for regulated entities. Auditors and regulators require qualified custody for any institution holding Bitcoin on its balance sheet.
For a standard $100 million position, that translates to $100,000-$500,000 per year in maintenance costs. Across the broader market’s BTC in institutional hands, the drain on capital is significant.
When those gains evaporate, and positions return to breakeven, the fees represent the entire year’s performance drag. The math produces a negative return before any operational or strategic value is factored in.
Meanwhile, Bitcoin-native yield infrastructure that could offset or eliminate these costs while generating additional returns has remained largely untapped by institutional holders, despite reaching maturity over the last 12 months.
Bitcoin-native yield infrastructure matured in 2025
Bitcoin-native DeFi, commonly called BTCFi, refers to yield infrastructure built directly on Bitcoin or Bitcoin-secured sidechains rather than through wrapped tokens or centralized lending platforms. Over the course of 2025, this infrastructure reached institutional viability.
BTCFi now represents approximately $8.6 billion in total value locked, according to data from December 2025. Major institutional custody providers have integrated with Bitcoin Layer 2 infrastructure. GAAP and IFRS accounting treatment for Bitcoin-denominated positions has been established through multiple audit cycles. Leading protocols have operated for multiple years with security models anchored to Bitcoin’s proof-of-work.
These systems generate yield without wrapping Bitcoin into ERC-20 tokens, selling underlying positions, or introducing the centralized custodial risk that dismantled firms like Genesis and BlockFi in 2022. The strategies available cover different risk profiles. Conservative approaches include lending and stablecoin collateralization in the 2-5% APY range. Moderate strategies involving structured vaults and liquidity provision generate 5-7% APY.
All maintain identical Bitcoin exposure. What changes is whether the asset generates income or sits idle while incurring costs.