Ethereum (ETH) continues to face mounting pressure as its price dips below $1,600, largely due to a significant outflow of capital from its decentralized finance (DeFi) ecosystem. In the week following former U.S. President Donald Trump’s repeal of the DeFi law, approximately $86 million in assets shifted away from Ethereum, fueling concerns over its dominance in the DeFi sector.
On April 10, Trump signed an executive order overturning a Biden-era policy that required DeFi protocols to adhere to strict Know Your Customer (KYC) and Anti-Money Laundering (AML) rules. This move was seen as a positive development for crypto-native projects, lifting a major regulatory burden. However, Ethereum, which has long been the backbone of DeFi activity, saw its market share erode as investors redirected funds to faster and more cost-efficient blockchains.
Solana Leads the Charge in DeFi Outflows
According to data from cross-chain bridge provider Wormhole, Solana absorbed the largest share of Ethereum’s outflows, with over $54 million migrating into its ecosystem. Other blockchains like Base, Arbitrum, and Avalanche also saw capital influxes, attracting $9.6 million, $5.8 million, and $3.9 million, respectively.
This capital migration has contributed to a significant rally for Solana, which has seen a 21% surge in its price, now trading at $135. Solana’s total value locked (TVL) in DeFi protocols has grown by 12%, reaching $6.9 billion as of April 16. This increase reflects over $800 million in deposits into Solana’s DeFi ecosystem since Trump’s executive order.
Solana’s Performance Boosts Investor Confidence
Solana, once plagued by performance issues in 2022, has shown remarkable improvements in both uptime and developer activity. The network processed over 60 million transactions daily this week, far surpassing Ethereum’s 1.1 million, while maintaining transaction fees under $0.01, according to Solana Explorer.
In contrast, Ethereum’s price remains under the $1,600 mark, with only an 8% gain on the weekly chart, placing it among the lowest-performing assets in the top 10 cryptocurrencies. As Ethereum’s DeFi dominance slips, institutional investors are increasingly turning to alternative Layer-1 protocols like Hedera and Avalanche, while Solana and Cardano continue to retain strong retail interest.
Ethereum Price Forecast: Potential Rebound in Sight
Despite the ongoing DeFi capital outflow, Ethereum’s price charts show signs of a potential rebound. The Bollinger Bands indicate a volatility squeeze, with resistance at $1,695 acting as the first target for a potential upside. The Parabolic SAR has flipped below the candlesticks, signaling a potential buy opportunity for traders, while the MACD histogram has turned positive, suggesting the possibility of bullish momentum.
If Ethereum clears the $1,695 resistance level, it could push towards the upper Bollinger Band at $1,960. However, if the price fails to maintain support around $1,430, a retest of lower levels, including $1,397, could occur, indicating the continued uncertainty in the market.
The ongoing trend of DeFi capital flight to alternative Layer-1 protocols underscores the growing competition Ethereum faces in the decentralized finance space, leaving its long-term dominance in question.
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