DeFi TVL Drops $45B Erasing Gains Since Trump’s Election

Key Points

• DeFi TVL Drops $45B Erasing Gains Since Trump’s Election
• DeFi’s total value locked (TVL) has plummeted back to pre-election levels.
• Ethereum and Solana face major declines, dragging down the overall DeFi market.
• Ethereum’s TVL dropped by $30.6 billion, despite Bitcoin hitting record highs.
• Ethereum’s Pectra upgrade faces roadblocks, adding to market uncertainty.

The decentralized finance (DeFi) sector is experiencing a major contraction, with total value locked (TVL) plunging by $45 billion since December. This drop erases all the gains made after Donald Trump’s 2024 election victory.

At its peak on December 17, DeFi TVL stood at $138 billion. However, by March 10, it had declined to $92.6 billion, according to DeFiLlama. Analyst Miles Deutscher pointed out that Ethereum and Solana have been the biggest casualties in this downturn.

Solana’s decline is mainly attributed to the fading memecoin hype, which had initially fueled its rise. Meanwhile, Ethereum has struggled, with Ether (ETH) failing to reach a new all-time high despite Bitcoin’s explosive rally past $109,000 on Trump’s inauguration day. Ethereum’s TVL alone has dropped by $30.6 billion, signaling serious liquidity concerns.

BREAKING: Bitcoin hits all time high as it surpasses $109,000 for the first time. pic.twitter.com/PcJGno3PvO

— ALX 🇺🇸 (@alx) January 20, 2025

This decline in DeFi TVL also coincides with Bitcoin facing volatility due to Trump’s economic policies, which have sparked concerns across the market. Analysts speculate that this uncertainty could mirror the 2017 Bitcoin boom, which was driven by geopolitical tensions and economic shifts. More details on this can be found here.

Total Value Locked (TVL) in DeFi has dropped by $45 billion from cycle highs.

This represents a 35% drawdown and is nearly a complete reversal of the gains it had made since the elections. 🩸 pic.twitter.com/v1nmNxWwY9

— Miles Deutscher (@milesdeutscher) March 10, 2025

Ethereum Faces Exchange Outflows and Upgrade Delays

Ethereum has been at the center of attention due to massive exchange outflows and unexpected technical setbacks in its upcoming Pectra upgrade.

Between March 3 and March 10, nearly 800,000 ETH, worth about $1.8 billion, left centralized exchanges. This marks the highest seven-day net exchange outflow since December 2022, according to IntoTheBlock. Typically, such large outflows indicate that investors are moving funds into staking or long-term holdings, rather than selling.

What makes this trend unusual is that Ethereum’s price dropped by 10% during the same period, hitting a low of $2,007. Historically, large exchange inflows signal selling pressure, but these outflows suggest investors are accumulating ETH, expecting a future price recovery.

Ethereum’s struggles are also visible in the broader crypto market, as Bitcoin ETF outflows recently hit $4.5 billion, adding to overall uncertainty. The growing pressure on institutional investments in crypto is a key factor to watch. Read more about it here.

📰 @BlackRock spot $BTC ETF reached a record $4.5 billion daily trading volume on Monday as Bitcoin’s price hit $89,000. #BTC pic.twitter.com/AhXUIehxrJ

— International Intelligence Network (@Nomadbullstreet) November 12, 2024

Adding to Ethereum’s challenges, the Pectra upgrade, designed to improve layer-2 efficiency and reduce gas fees, ran into issues during its March 5 testnet launch. Developer Marius van der Wijden reported that errors in Geth nodes led to empty blocks being mined due to a deposit contract issue. A fix has been implemented, but the incident raised concerns about Ethereum’s ability to roll out improvements smoothly.

What’s Next for DeFi and Ethereum?

Despite the decline in DeFi TVL, institutional interest in crypto remains strong. Michael Saylor’s Bitcoin reserve strategy is a prime example of how major investors still see long-term value in blockchain assets. You can read about his plan here.

Meanwhile, crypto exchanges like Gemini, Kraken, and BitGo are gearing up for potential IPOs, signaling that the industry is maturing despite short-term price fluctuations. If these firms successfully go public, it could inject new capital into the crypto space. More details on this crypto IPO wave can be found here.

For now, Ethereum and DeFi will need to regain momentum, especially with Bitcoin experiencing a correction after its recent peak. If Bitcoin dips further, as some analysts predict, it could put additional pressure on Ethereum and the broader DeFi market. Read more about Bitcoin’s recent crash to $80K following Trump’s policies here.