Ethereum (ETH) price tumbles below $1,600, a week after Trump repealed the DeFi KYC mandate

Ethereum's dominance in decentralized finance (DeFi) is under intense pressure this week, triggering bearish tensions in the ETH spot markets.

Despite a broader crypto market recovery this week, Ethereum price has tumbled below $1,600.

The second-largest cryptocurrency is lagging behind Bitcoin and other top altcoins as investors react to Donald Trump’s decision to nullify the Biden-era mandate requiring decentralized finance (DeFi) protocols to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.

The move has seen a slew of crypto assets shift from Ethereum to Solana and other DeFi networks.

Ethereum price performance lags as markets reacts to Trump’s DeFi law repeal

Ethereum’s dominance in decentralized finance (DeFi) is coming under pressure this week, setting bearish implications for the ETH spot markets.

On Wednesday, Ethereum price languished below the $1,500 level as BTC flips to $85,000. A sudden NVIDIA sell-off also saw investors rotate funds from US stock markets towards crypto assets, setting top altcoins like Bitcoin Cash and Litecoin for mild gains.

Ethereum price performance

However, on-chain data shows that Ethereum’s persistent underperformance could be linked to swings in capital flows within the global DeFi sector.

On April 10, Trump signed an executive order nullifying a Biden-era policy that required DeFi protocols to comply with KYC and AML regulations. The reversal has been seen as a win for crypto-native platforms and open financial infrastructure.

But for Ethereum, the aftermath has been decisively negative.

Investors have persistently shifted assets out from Ethereum into other rival networks, data from cross-chain bridge Wormhole shows. The move comes a week after the former U.S. President Donald Trump repealed the law.

Solana captures 60% of outflows as investors withdraw $86M from Ethereum

Of the outflows, Solana absorbed the lion’s share, drawing over $54 million—nearly 62% of the total. Base, Arbitrum, and Avalanche followed with $9.6 million, $5.8 million, and $3.9 million in inflows over the past week.

Ethereum Cross Chain transaction flows | Source: Wormhole Bridge

Most Solana-bound assets were funneled into high-velocity DeFi protocols like Jupiter, Kamino, and MarginFi, which have seen surging volumes amid Solana’s improved scalability and lower fees.

Solana DeFi Total Value Locked, April 16 2025 | Source: DeFillama

The move sparked a strong market response. Solana’s total value locked (TVL) surged 12% over the past week, climbing from $6.1 billion on April 9 to $6.9 billion as of April 16, according to DeFiLlama.

More than $800 million in fresh capital was deployed across Solana-based protocols during that period.

Solana’s native token SOL also rallied, gaining 21% over the past week to trade at $135. In comparison, Ethereum’s price rose just 8%, lagging nine of the top 10 cryptocurrencies by market capitalization.

Ethereum's long-term market share at risk

The sharp capital rotation suggests that Ethereum’s long-standing lead in DeFi could be eroding as developers and users seek faster, lower-cost environments.

While Ethereum still leads in total value locked—with over $80 billion—it is increasingly being challenged on performance metrics and user experience.

Institutional investors pursuing real-world asset tokenization and onchain securities issuance are pivoting to Avalanche and Hedera, which offer native compliance tooling and low fees.

Meanwhile, Solana and Cardano continue to dominate the retail trading and memecoin space due to their scalability and community traction.