The crypto cosmos is buzzing, and not in a good way. The total value locked (TVL) in decentralized finance (DeFi) protocols has taken a nosedive, wiping out all the gains since Donald Trump was elected U.S. president back in November 2024. It’s like a rollercoaster ride that just won’t stop!
After the U.S. election, DeFi TVL soared to a staggering $138 billion by December 17. But by March 10, it had plummeted to $92.6 billion, leaving crypto enthusiasts scratching their heads. Analyst Miles Deutscher was quick to point out this dramatic shift.
Solana, once the darling of the memecoin world, is now facing criticism as its popularity fades. But it’s not just Solana feeling the heat. Ethereum, the heavyweight champion of DeFi, is also grappling with its own set of challenges. Despite Bitcoin’s meteoric rise past $109,000 on Trump’s inauguration day, Ethereum’s Ether (ETH) has struggled to reach new heights. Ethereum’s TVL has dropped by a whopping $30.6 billion from its cycle highs, according to DefiLlama data.
Ether’s record high of $4,787 from November 2021 remains unbroken, even with positive developments like spot exchange-traded funds (ETFs) launching in the U.S. and Trump’s executive order for a strategic Bitcoin reserve. It’s a tough time for Ethereum supporters.
And there’s more. Nearly 800,000 ETH, worth around $1.8 billion, left exchanges in the week starting March 3. This marks the highest seven-day net outflow since December 2022, as reported by IntoTheBlock data. It’s an unusual move given Ether’s 10% price decline during this period, hitting a low of $2,007.
Typically, exchange inflows signal selling pressure, while outflows suggest long-term holding or movement into DeFi applications like staking or yield farming. IntoTheBlock noted that despite ongoing pessimism around Ether prices, many holders see current levels as a strategic buying opportunity.
Before March 3, Ethereum experienced daily net exchange inflows, indicating that investors were selling during the downturn. Juan Pellicer, a senior research analyst at IntoTheBlock, explained that ETH’s drop to $2,100 may have triggered accumulation, leading investors to withdraw funds from exchanges.
Meanwhile, Ethereum’s rollup-centric roadmap has reduced congestion and gas fees but introduced liquidity fragmentation. The upcoming Pectra upgrade aims to tackle this by enhancing layer-2 efficiency and interoperability. By doubling the number of blobs, it reduces transaction costs and helps consolidate liquidity.
However, the Pectra upgrade rollout hit a snag on March 5 when it launched on the Sepolia testnet. Ethereum developer Marius van der Wijden reported errors on Geth nodes and empty blocks being mined due to a deposit contract triggering an incorrect event type. A fix has been deployed.
So, as the crypto world holds its breath, all eyes are on Ethereum’s next move. Will it rise from the ashes and reclaim its former glory? Only time will tell!
