Ethereum (ETH) has rallied nearly 20% over the past two days as the broader decentralized finance (DeFi) sector surged following Donald Trump’s presidential victory.

Ethereum is starting to gain momentum

The second-largest cryptocurrency by market capitalization has lagged behind Bitcoin (BTC) and other clever contract platform tokens such as Solana (SOL) for most of the year.

However, after Trump’s victory as the Republican candidate for US President, the ETH price has increased by over 10% since yesterday. The development of the token has drawn attention to one of the most groundbreaking Ethereum employ cases to date – DeFi.

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While analysts attribute some of this growth to higher crypto asset prices, they also point out that trading volume on some DeFi platforms is “almost back to 2022 levels, proving that the recovery is real.”

Cheong and Yap outline several factors that indicate that the DeFi ecosystem is heading towards the era of “DeFi renaissance”

First, analysts note that DeFi appears to be emerging from a “trough of disillusionment.” For the uninitiated, disappointment is the phase of the Gartner hype cycle when interest in a technology wanes because initial expectations are not met.

As shown in the chart below, DeFi is going through an “enlightenment slope” phase, likely heading towards a “productivity plateau” as the technology matures.

Additionally, macroeconomic factors, including a low interest rate environment, are expected to enhance DeFi adoption in two key ways: reducing opportunity costs and increasing lending affordability.

With Treasury bills and classic savings accounts offering minimal yields, investors are increasingly turning to income-generating DeFi strategies such as yield farming, staking, and liquidity mining.

Lower interest rates will also likely enhance the supply of stablecoins, lowering lending prices, thus providing additional liquidity to fuel DeFi growth.

How is a Trump presidency bullish for ETH?

The analysis highlights that the 2024 US presidential election could provide DeFi with much-needed regulatory clarity. Trump’s presidency is expected to bring more favorable regulation of cryptocurrencies, which could boost investor confidence.

As such, ETH is expected to benefit from the enhance in DeFi investor interest. Analysis by cryptocurrency experts suggests that ETH could rise to $3,400 if it breaks certain key resistance levels.

Something vital also happened enhance in Ethereum whale activity, which indicates that sophisticated and experienced ETH holders are hoarding the token in anticipation of potential growth.

ETH faces stiff competition from rival clever contract platforms such as Solana. According to a recent one reportin Q3 2024, TVL grew to $5.7 billion in the SOL DeFi ecosystem.

At press time, ETH is trading at $2,806, up 7.1% in the last 24 hours, with a total market capitalization of $338.6 billion.

Featured image from Unsplash, charts from X.com and Tradingview.com