The flagship cryptocurrency Bitcoin ($BTC) could be on the cusp of unlocking a massive $500 billion opportunity in the rapidly expanding decentralized finance (DeFi) sector, according to a partner with leading cryptocurrency hedge fund Pantera Capital.

As reported by TheStreet Franklin Bi, a partner at Pantera, believes a confluence of factors are creating a “breakthrough moment” for Bitcoin-based DeFi, often referred to as BTCFi. He argues that recent technological advancements and broader market trends are paving the way for a “decentralized financial system” with Bitcoin “at its foundation.”

While Ethereum has traditionally been the dominant platform for DeFi applications, Bi sees Bitcoin’s potential to offer “similar or greater potential” in this space. This shift could be driven by several factors including Bitcoin’s rising price with the recent approval of spot exchange-traded funds (ETFs) in the United States.

Other factors include Ethereum, while pioneering DeFi, facing limitations in scalability and transaction costs. Bitcoin’s established network and growing adoption could offer a more robust foundation for future DeFi applications, he suggested.

Pantera Capital CEO Dan Morehead anticipated these factors will generate “strong tailwinds” for Bitcoin’s integration into DeFi, potentially unlocking significant growth and solidifying its position as a mainstream financial asset.

Pantera’s analysis come at a time in which long-term Bitcoin investors, often referred to as “hodlers,” have sold approximately 200,000 BTC since the beginning of the year, marking a consistent decrease in their holdings over the last three months.

As reported, Bitcoin holdings on Nasdaq-listed cryptocurrency exchange Coinbase, the largest crypto trading platform in the United States, have fallen to their lowest level since 2017 as BTC whales started withdrawing funds into self-custody.

According to data from CryptoQuant whales – investors holding large amounts of Bitcoin – have withdrawn over $1 billion worth of the cryptocurrency from the platform in recent weeks, leading over 18,000 BTC off of the exchange’s wallets.

This movement coincides with increased buying activity by whales who accumulated over 100,000 BTC in just ten days, worth over $5 billion, according to popular cryptocurrency analyst Ali Martinez.

It’s unclear whether the Bitcoin addresses of spot Bitcoin ETFs were included or excluded in the data, but it underscores the growing pressure being put on Bitcoin’s supply ahead of its upcoming halving event in April, which will reduce the coinbase reward miners receive for finding blocks.

Featured image via Unsplash.