Bitcoin-native decentralized finance (DeFi) protocols are seeing a notable contraction in total value locked (TVL), a metric that may be weighing on the price of the KXBTC derivative contract. According to data from DefiLlama, the total value locked on the Bitcoin chain using native BTC is currently sitting at $3.9 billion, representing a 4.28% decline over the past seven days. This reduction in capital efficiency suggests a pullback in on-chain DeFi activity, which can correlate with decreased demand for spot Bitcoin assets.
This reduction in capital efficiency suggests a pullback in on-chain DeFi activity, which can correlate with decreased demand for spot Bitcoin assets. The resulting selling pressure in spot markets increases the probability that the BRTI index will settle below its current threshold, putting downward pressure on the KXBTC contract price.
What would change this read
A significant rebound in Bitcoin-native DeFi TVL, specifically an increase of more than 5% over the next seven days, would likely alleviate the current selling pressure and support a higher settlement for the KXBTC contract.
