Ether (ETH) crossed $2,800 for the first time since early August, breaking out of rangebound trading that saw prices stuck between $2,300 and $2,600 levels despite a breakout in bitcoin (BTC). A ratio tracking the performance of the two majors slid to April 2021 levels on Tuesday — indicative of a fallout in investor demand for ETH.
But President-elect Donald Trump’s victory is bringing back hopes of a decentralized finance (DeFi) bull market, at least among some investors, and with it demand for ETH.
“DeFi Renaissance thesis is progressing as expected with Trump deregulation and crypto friendly policy and rule-making from Republican admin and Senate,” wrote Arthur Cheong, co-founder at DeFiance Capital, in an X post. “Elon gonna help usher in the golden age of innovation and capitalism.”
In early October, Cheong published a viral thesis on why DeFi applications could see a bump in user base and token demand after a disappointing few years — pointing to growing activity metrics and an increase in new money flowing into DeFi projects.
“In fact, some foundational DeFi projects, like Aave, have even surpassed their 2022 peak in several metrics. Aave’s quarterly revenue has surpassed that of 4Q21 — considered the height of the last bull market,” Cheong said. “This signals that DeFi is maturing and entering a new phase of productivity, poised for long-term scalability.”
The bullish sentiment comes from Trump's promise to make the U.S. a leading hub for cryptocurrency during his campaigns, which might translate into more favorable regulations for DeFi.
The campaign indicated a move toward reducing the regulatory burden on crypto, potentially making it easier for DeFi platforms to operate within the U.S. This could involve clearer guidelines for token offerings, possibly recognizing certain tokens as commodities rather than securities under SEC oversight.
“Imagine the next 4 years being the complete opposite of the last few years when it comes to what DeFi projects are "allowed" to do,” said Ethereum educator @sassal0x in an X post. “Fee switches, fee switches everywhere!”
Some even point out the Trump family’s backing of World Liberty Financial as a key reason for the market sentiment.
Traders are already reacting favorably to Trump's presidency. Mindshare - a tracker of social media sentiment on X - for DeFi is leading among other trending sectors such as AI and memecoins in the past 24 hours, per Kaito data.
Various DeFi indexes tracking the prices of major projects are up 22% on average in the past 24 hours, CoinGecko data shows, while majors tracked by the broad-based CoinDesk 20 are up 3.4% in the period.
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