Over the last year, institutional takeovers of BTC and, by extension, the Bitcoin network have been a hot issue.
The widespread opinion holds that institutional adoption will result in the centralization of the Bitcoin network and a total control of the network's currency supply by governments, public businesses, and banks, defeating the goal of its inception.
source
According to Bitbo statistics, known centralized companies now control 14.713% of Bitcoin's supply, with ETF issuers accounting for up to 41.98%.
Given that Bitcoin spot ETFs were only approved one year and three months ago, the acquisition of supply dominance in such a short period of time raises worries about institutional capture of Bitcoin's supply as well as doubts about the Bitcoin network's sovereignty in the future.
Beyond ETFs, established publicly listed firms are rapidly increasing their Bitcoin holdings. According to a Cointelegraph story quoting cryptocurrency fund issuer Bitwise, at least twelve public businesses purchased Bitcoin for the first time in Q1 2025, leading to a 16% increase in aggregate holdings among public firms over the same quarter.
According to the data, public firms acquired around 95,431 BTC.
DeFi using Bitcoin as a solution
The majority of Bitcoin's prospective trend toward centralization is directly related to decreased use of the Bitcoin network by average people.
The less reason there is to own or utilize Bitcoin, the more likely individuals are to sell out to governments and organizations.
DeFi on Bitcoin addresses this by providing BTC a usecase that drives greater onchain activity, perhaps making ETFs less appealing vehicles for traditional investors.
If users and investors are adequately encouraged to keep their Bitcoin on-chain and enable decentralized finance to increase in liquidity, Bitcoin's rising price will have no overall impact on the majority of bitcoin holders.
Consider generating a sustainable interest on your Bitcoin stack, perhaps 8-18% safe yield.
This relatively little return is more likely to promote retaining BTC since the yield isn't the sole value-add, as BTC's price rises alongside the dividend.
In reality, users might be effectively expanding their wealth by over 100% every 4-5 years without having to sell their Bitcoin due to the dividend, which ideally should arrive in stablecoins, allowing investors to get access to spendable funds without touching their Bitcoin holdings.
Decentralized financial solutions that are secure and sustainable, designed for bitcoin holders or atop bitcoin, will play a critical role in ensuring that Bitcoin's finite supply is not readily swept up by governments and institutional investors, maintaining the security.