Bitcoin News Today: DeFi's Idle Liquidity and Security Crises Collide with Institutional Bitcoin Bets

The decentralized finance (DeFi) sector faces mounting challenges as $12 billion in liquidity remains idle, with 95% of capital unused across protocols, according to recent reports. Compounding these woes, Aerodrome Finance-a decentralized exchange on Coinbase's Base network-suffered a front-end attack this week, with attackers exploiting DNS hijacking to redirect users to phishing sites. While the underlying smart contracts remained secure, the incident has raised fresh concerns about DeFi security frameworks. Aerodrome urged users to avoid its main domain and use decentralized ENS mirrors instead, adding that the investigation into potential losses is ongoing.

The attack follows a broader trend of DeFi vulnerabilities. Aerodrome has faced two similar incidents in late 2023, resulting in $300,000 in user losses. This latest disruption arrives just days after the protocol announced a merger with Velodrome to consolidate liquidity across Base and Optimism under the "Aero" ecosystem. Despite the turmoil, AERO's token price held steady at $0.67, up 2% in 24 hours.

Meanwhile, Bitcoin's price slump below $90,000 has triggered a wave of panic selling, with Glassnode data showing liquidity clusters collapsing as investors flee the asset. The selloff coincided with record outflows from BlackRock's iShares Bitcoin Trust (IBIT), which lost $523 million in a single day-its largest outflow since launching in January 2024. Over five days, Bitcoin ETFs shed $1.425 billion, with IBIT accounting for $355 million of the redemptions.

The retreat reflects broader macroeconomic pressures, including the Federal Reserve's high-rate environment and geopolitical uncertainties. Harvard's endowment took a contrasting approach, investing $218 million in gold and Bitcoin ETFs in Q2 2025. The endowment's shift underscores institutional confidence in Bitcoin as a hedge against inflation, despite its recent volatility.

Regulatory developments also dominated the week. The U.S. Securities and Exchange Commission (SEC) signaled faster approval paths for crypto ETFs, with XRP-focused products gaining attention. Bitwise's XRP ETF debuted on the NYSE, signaling growing mainstream acceptance of altcoins.

Institutional players, meanwhile, are recalibrating strategies. DeFi protocol Spark shelved plans for a retail crypto app to focus on institutional infrastructure, including a $1 billion investment in PayPal's PYUSD stablecoin. This move highlights a sector-wide pivot toward institutional-grade solutions as retail adoption faces headwinds.

The DeFi sector's liquidity crunch and security vulnerabilities, coupled with Bitcoin's price turbulence, paint a picture of a market grappling with growth pains. While institutional investments and regulatory clarity offer hope, the recent setbacks underscore the need for robust governance and innovation to sustain long-term adoption.

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"Liquidity Crisis: $12B in DeFi Liquidity Sits Idle as 95% of Capital Goes Unused" https://www.coindesk.com/web3/2025/11/22/liquidity-crisis-usd12b-in-defi-liquidity-sits-idle-as-95-of-capital-goes-unused

"Aerodrome Finance Hit by 'Front-End' Attack, Users Urged to Avoid Main Domain" https://www.coindesk.com/web3/2025/11/22/aerodrome-finance-hit-by-front-end-attack-users-urged-to-avoid-main-domain

"Harvard's Endowment Goes Big on Bitcoin and Gold in Second Quarter of 2025" https://www.thecrimson.com/article/2025/8/9/hmc-q2-2025-filings/

"BlackRock Bitcoin ETF Sees Record $523 Million Outflow as BTC Drops Below $90,000" https://www.coinspeaker.com/blackrock-ibit-record-523m-outflow-bitcoin-etf-redemptions/amp/

"Bitwise XRP ETF, BTC Narrative Collapse, and More - Week in Review" https://api.news.bitcoin.com/wp-json/bcn/v1/post?slug=bitwise-xrp-etf-btc-narrative-collapse-and-more-week-in-review