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Institutional Bitcoin (BTC) holders kicked off 2025 with Bitcoin priced around $94,000. By October, they witnessed a rise to an unprecedented high of $126,200, reinforcing the macro thesis of digital scarcity and institutional adoption. Treasuries that weathered the fluctuations, miners who opted not to sell, and funds that maintained their allocations all benefited from this appreciation on paper.
Summary
- Bitcoin’s 2025 round-trip revealed an underlying cost for institutions: Prices finished flat-to-down, but custody fees transformed conviction into negative returns.
- Holding idle BTC is now a strategic misstep, not a neutral decision: In 2025, Bitcoin-native yield platforms matured, providing 2–7% APY without the need for wrapping, selling, or incurring centralized risks.
- The next phase is optimizing balance sheets: Institutions and miners that combine BTC exposure with native yield can mitigate custody costs and generate returns — independent of price movements.
However, they ultimately relinquished those gains. Bitcoin now trades around $85,000, below its starting price for the year. Institutions that capitalized on the fluctuations find themselves with year-to-date returns below zero. Despite the stagnant price, costs continued to mount. Qualified custody fees remained consistent at 10 to 50 basis points throughout the year. Yield prospects remained untapped, resulting in tangible costs from this round-trip.
For the largest corporate holders (600,000+ BTC), the opportunity loss from keeping that capital inactive is tremendous. Within the industry’s ~2 million institutional BTC (held by corporate treasuries, private enterprises, and governments), the total custody costs often amounted to over $100 million, approaching $1 billion. For positions that ended the year flat, these fees equate to a pure loss. If these positions had employed Bitcoin-native yield setups, they could have alleviated custody expenses and realized positive returns.
The pressing question for treasuries now is not whether Bitcoin serves as a reliable store of value. Rather, it is whether flat performance, minus custody fees, constitutes an acceptable outcome in light of available infrastructure that could change this reality.
Understanding Custody Costs
Institutional Bitcoin holders face qualified custody requirements which entail annual fees ranging from 10 to 50 basis points. These costs are seldom negotiable for regulated bodies. Auditors and regulators mandate qualified custody for any institution holding Bitcoin on their balance sheets.
For a typical $100 million investment, that equates to annual maintenance fees of $100,000-$500,000. This capital drain becomes significant across the broader market’s BTC managed by institutions.
When those gains dissipate and positions approach breakeven, the fees reflect the entire year’s performance drag. The resulting calculations produce negative returns before integrating any operational or strategic value.
Meanwhile, Bitcoin-native yield infrastructure capable of mitigating or erasing these costs while generating supplementary returns remains largely underutilized by institutional holders, despite reaching a level of maturity over the past year.
Maturity of Bitcoin-native Yield Infrastructure in 2025
Bitcoin-native decentralized finance (DeFi), known as BTCFi, signifies yield mechanisms constructed directly on Bitcoin or Bitcoin-secured sidechains instead of using wrapped tokens or centralized lending services. In 2025, this infrastructure achieved institutional viability.
BTCFi is now valued at roughly $8.6 billion in total assets locked, as indicated by December 2025 data. Major custody providers for institutions have integrated with Bitcoin Layer 2 systems. GAAP and IFRS accounting practices for Bitcoin-denominated assets have been established through several audit cycles. Leading protocols have been in operation for multiple years, utilizing security models anchored in Bitcoin’s proof-of-work.
These systems generate yield without the need to wrap Bitcoin into ERC-20 tokens, sell underlying assets, or introduce the centralized custodial risk that dismantled firms like Genesis and BlockFi in 2022. Strategies available vary in risk profiles. Conservative approaches, such as lending and stablecoin collateralization, yield 2-5% APY, while moderate strategies, which involve structured vaults and liquidity provision, yield 5-7% APY.
All options maintain identical exposure to Bitcoin. The key difference lies in whether the asset produces income or remains dormant, accruing costs.
Analyzing the Costs of 2025’s Round-trip
Imagine an institutional Bitcoin position that commenced in 2025 at $94 million (1,000 BTC at $94,000). Following a traditional custody model charging 30 basis points annually, this position incurred $282,000 in custody fees throughout the year while yielding 0%.
When Bitcoin reached $126,000 in October, the position’s value soared to $126 million, indicating a notable unrealized gain. However, as Bitcoin fell back to $93,000 by mid-November, the position decreased to $93 million. This results in a realized loss of $1 million from the starting point, in addition to $282,000 in custody fees. In total, the impact is a negative $1.282 million.
Conversely, under a Bitcoin-native yield model, the same institution could have removed custody drag through integrated infrastructure while achieving around 6% APY via conservative structured lending tactics. This would yield approximately 60 BTC. At the lower price of $93,000, the total position would now be valued at $98.5 million.
The disparity between these two approaches for a single $94 million initial position is roughly $5.5 million. At the scale of the largest corporate treasuries, this potential difference could total hundreds of millions over the year. Across the institutional landscape, the gap between actual outcomes and potential ones is measured in the billions.
Why Miners are Leading the Charge
Bitcoin miners confront a more acute version of this challenge. They require working capital for their operations, yet selling BTC to obtain it means relinquishing any future appreciation. Traditional alternatives have been restricted to either selling at the cost of potential gains or holding idle reserves while borrowing capital at high rates.
Post-halving economics have intensified the urgency of this decision. Following the halving event in April 2024, mining rewards decreased by half, leading to squeezed operational margins. Miners who experienced Bitcoin moving from $94k to $126k and back without generating yield on their treasury positions now face the 2026 budgeting season, having incurred a full year of custody fees with no returns to show.
Insights from 2025
Institutional Bitcoin strategies functioned as intended through October. Bitcoin increased by 34% from January levels, and holders reaped those benefits. The infrastructure proved effective. Qualified custody scaled correctly, ETFs attracted tens of billions in inflows, and corporate treasuries kept adding to their holdings.
Yet, 2025 also showcased the consequences when volatility occurs in both directions. Positions ending the year flat or negative were still subject to unavoidable costs. Performance metrics centered around the October peak only obscure the full-year realities.
The necessary infrastructure to harmonize price exposure with yield generation—without the burden of custody drag—now exists. It has functioned through multiple market cycles, boasting billions in total value locked. Compliance frameworks for GAAP and IFRS have been developed through multiple audit cycles. Bitcoin-native infrastructure successfully navigated several bear markets, avoiding the structural issues that impacted centralized lenders.
As institutions review their performance from 2025 and strategize for 2026, the pivotal question remains whether flat-to-negative returns, inclusive of custody fees, are an acceptable outcome when alternatives exist that preserve identical Bitcoin exposure while simultaneously generating income. Conviction has driven Bitcoin’s adoption, and strategic management can ensure these holdings work harder.
Bitcoin exhibited volatility in 2025. With yield infrastructure now operational and integrated with qualified custody providers, the year 2026 presents institutions with an opportunity to capture returns irrespective of whether Bitcoin escalates, declines, or maintains stability.
