The cryptocurrency and financial markets have faced significant turbulence in recent months, with shifting economic policies and evolving investor sentiment shaping the landscape. In the wake of Donald Trump’s return to the White House, speculation has emerged that the administration may be influencing market conditions to push for lower interest rates. At the same time, the decentralized finance (DeFi) sector has seen a sharp decline, wiping out gains made since Trump’s election, with Ethereum and Solana among the hardest hit.
Is Trump Engineering a Market Meltdown to Force Powell’s Hand on Interest Rates?
The financial markets have been thrown into turmoil amid growing speculation that the Trump administration may be strategically engineering uncertainty to pressure Federal Reserve Chair Jerome Powell into cutting interest rates.
According to Bitcoin advocate and market commentator Anthony Pompliano, President Donald Trump and Treasury Secretary Scott Bessent could be deliberately stoking market volatility to force Powell’s hand. Their goal, Pompliano suggests, is to lower borrowing costs ahead of the US government’s refinancing of approximately $7 trillion in debt over the next few months.
Pompliano’s theory, shared in a March 10 post on X, suggests that Trump’s recent moves—including implementing tariffs and making strong public statements against high interest rates—are part of a broader strategy to create market instability.
By doing so, the administration may be trying to build pressure on Powell to cut rates, which would ease borrowing costs and make it cheaper for the US government to manage its growing debt obligations.
“The Trump administration is crashing asset prices in an attempt to force Jerome Powell to cut interest rates,” said Pompliano, who serves as the founder and CEO of Professional Capital Management and host of The Pomp Podcast.
His argument centers on the decline in the 10-year Treasury yield, which has fallen from nearly 4.8% in January to 4.21% now. The drop suggests that investors are anticipating looser monetary policy in the near future, which would align with Trump’s broader economic vision.
The apparent standoff between Trump and Powell dates back to the president’s first term, when he frequently criticized the Federal Reserve for maintaining high interest rates. Now, with Trump back in the White House, the pressure campaign appears to be escalating.
In late January, Powell reaffirmed that the Fed would not lower interest rates from their current target range of 4.25% to 4.50%, despite Trump’s public demands for cuts. This has fueled speculation that the White House is using other means—such as market turbulence—to make rate cuts inevitable.
Recent stock market sell-offs lend credibility to this theory. Broad market indexes suffered significant losses on March 10, with the S&P 500 index fund (SPY) falling 2.66% and the Nasdaq-100 plummeting 3.8%. Over the past month, the S&P 500 is down 7.32%, while the Nasdaq-100 has shed 10.7%.
The cryptocurrency market has fared even worse. Bitcoin (BTC) has plunged 27.4% from its record high of $108,786, bringing its current price to $79,726. Since Dec. 17, over $1.2 trillion in market capitalization has evaporated from the crypto sector.
The continued downturn, Pompliano argues, could eventually reach a breaking point where the Federal Reserve is left with no choice but to cut rates.
Trump himself has not explicitly confirmed such a strategy, but his recent remarks indicate that he sees high interest rates as a significant economic impediment.
“Nobody ever gets rich when the interest rates are high because people can’t borrow money,” Trump said in a March 9 Fox News interview.
Pompliano believes this statement reinforces the idea that Trump’s ultimate objective is to drive interest rates lower—whether through direct influence over the Fed or through economic disruption that makes cuts unavoidable.
“The big goal is to get interest rates down, and that will lead to more economic activity thanks to access to cheap capital,” he added. “Give the people cheap capital, and they’ll go and do things with it.”
Will Powell Blink? Market Expectations Are Split
The Federal Reserve’s next meeting on March 19 is unlikely to result in a rate cut. According to CME FedWatch, a tool that tracks market expectations for Fed rate decisions, there is a 96% probability that the central bank will maintain its current policy.
However, the outlook for the following meeting on May 7 is much less certain. Market expectations suggest nearly a 50-50 chance that Powell and his colleagues could decide to lower rates.
Historically, the Federal Reserve has been reluctant to cut rates when inflation remains a concern, as one of its primary objectives is to maintain price stability. Lowering rates too soon could risk reigniting inflationary pressures, something Powell has repeatedly warned against.
But if Trump’s suspected strategy succeeds in triggering a recession—or at least a severe enough downturn—then the Fed may have little choice but to ease monetary policy to stabilize the economy. This scenario, which some analysts have labeled a “Trumpcession,” could play out if market instability worsens in the coming months.
The theory that Trump is intentionally crashing markets to gain leverage over Powell remains speculative. However, the unfolding events suggest a calculated effort to influence the Federal Reserve’s decision-making process.
Whether this strategy will ultimately work remains uncertain. Powell and the Fed have so far resisted political pressure, maintaining that their policy decisions are guided by economic fundamentals rather than political influence. But with markets on edge, the coming weeks could prove to be a crucial test of who blinks first—Trump or Powell.
Regardless of the outcome, the current financial turmoil underscores the delicate balance between monetary policy, political influence, and economic stability. Investors should brace for continued volatility as the battle over interest rates intensifies.
DeFi Market Wipes Out Trump-Era Gains as Ethereum Struggles Amid Market Uncertainty
In other news, the decentralized finance (DeFi) sector has seen a dramatic reversal in fortunes, wiping out all the gains it accumulated since Donald Trump was elected US president in November 2024.
After reaching a peak of $138 billion in total value locked (TVL) on Dec. 17, DeFi’s TVL has since plummeted to $92.6 billion by March 10, marking a steep decline that sheds light on the sector’s ongoing challenges. Crypto analyst Miles Deutscher was among those who highlighted this trend, pointing to a combination of market factors driving the downturn.
While the entire DeFi sector has suffered, Ethereum and Solana have been particularly hard hit.
Solana, which saw a meteoric rise in popularity due to meme coins and low-cost transactions, has struggled to maintain its traction. The fading appeal of Solana’s meme coins has contributed to its TVL decline, leading to concerns about its long-term growth.
Ethereum, the backbone of DeFi, has also faced significant hurdles. Despite Bitcoin reaching an all-time high of $109,000 on Jan. 20—the day of Trump’s inauguration—Ethereum’s price has failed to revisit its previous high of $4,787 from November 2021. Instead, ETH has remained underwhelming, with its TVL shrinking by $30.6 billion from cycle highs, according to DefiLlama data.
Despite positive developments, such as the launch of spot Ethereum exchange-traded funds (ETFs) in the US and Trump’s executive order for a strategic Bitcoin reserve, Ethereum has been unable to capitalize on the broader market momentum.
One of the most notable trends in recent weeks has been Ethereum’s massive net exchange outflows.
According to IntoTheBlock data, approximately 800,000 ETH—worth about $1.8 billion—was withdrawn from exchanges in the week starting March 3. This marks the highest seven-day net outflow since December 2022.
Typically, when large amounts of a cryptocurrency leave exchanges, it signals a long-term holding strategy or movement into DeFi applications like staking or yield farming. However, this recent outflow coincided with a 10% drop in Ether’s price, which fell as low as $2,007 during the period. This is an unusual dynamic, as exchange outflows generally occur when prices are rising rather than falling.
“Despite ongoing pessimism around Ether prices, this trend suggests many holders see current levels as a strategic buying opportunity,” IntoTheBlock stated in a March 10 post on X.
Before March 3, Ethereum had experienced net exchange inflows daily, indicating that investors were actively selling during the market downturn. According to Juan Pellicer, senior research analyst at IntoTheBlock, Ether’s dip to $2,100 may have triggered accumulation, prompting investors to withdraw their holdings from exchanges for long-term storage or staking.
Ethereum’s Pectra Upgrade Encounters Challenges
Amid these market shifts, Ethereum developers continue working on major upgrades aimed at improving the network’s efficiency and usability.
The upcoming Pectra upgrade seeks to address some of the network’s long-standing issues, particularly liquidity fragmentation caused by Ethereum’s rollup-centric roadmap. By doubling the number of blobs in transactions, Pectra aims to lower gas fees and improve layer-2 interoperability. Additionally, account abstraction improvements will make smart contract wallets more seamless across Ethereum and layer-2 networks, enhancing bridging and fund management.
However, the rollout has encountered its own set of challenges. On March 5, the Pectra upgrade launched on Ethereum’s Sepolia testnet, but it quickly ran into issues. Ethereum developer Marius van der Wijden reported that Geth nodes were experiencing errors, and empty blocks were being mined due to a deposit contract triggering an incorrect event type. A fix has since been deployed, but the setback highlights the technical hurdles that still exist in Ethereum’s evolution.
The decline in DeFi TVL signals broader concerns about the industry’s resilience. While macroeconomic conditions and regulatory uncertainty have played a role, the downturn also raises questions about the sustainability of DeFi’s explosive growth in previous cycles.
Ethereum’s struggles to reach new highs, even in the face of positive catalysts like ETFs and network upgrades, suggest that DeFi still faces an uphill battle in regaining investor confidence. Additionally, the market shift toward Bitcoin—evidenced by its all-time high earlier this year—suggests that many investors are prioritizing stability over riskier DeFi investments.
With nearly $50 billion in DeFi TVL wiped out since December, the industry will need to adapt to a changing landscape. Whether the Pectra upgrade and continued Ethereum development can reinvigorate DeFi remains to be seen, but for now, the sector is grappling with one of its most significant downturns in recent history.
This article was originally Posted on Coinpaper.com
