Bitcoin Faces Bullish Trifecta with Trump Return Fed Liquidity and DeFi Rebound

Trump's Economic Policy, U.S. Treasury Buyback, and DeFi Revival Bitcoin Price Surge Anticipation [Unblock Media] Three major factors are drawing attention in the cryptocurrency market: the direction of Trump’s economic policies, the possibility of the Federal Reserve (Fed) repurchasing U.S. Treasury bonds, and the return of DeFi (Decentralized Finance) profit models. This analysis examines how each of these changes could apply upward pressure on the prices of Bitcoin and Ethereum. President Donald Trump injected significant liquidity into the U.S. economy through tax reform (Tax Cuts and Jobs Act) and large-scale deregulation in 2017. Such policy directions can contribute to boosting investment sentiment across risky assets, including the stock market. It's expected that policies of tax cuts and deregulation will be promoted again. This could increase inflationary pressures and prompt investors to revisit digital assets like Bitcoin and Ethereum as a hedge against inflation. During Trump’s first term from 2017 to 2020, Bitcoin’s price surged by about 800%, while the U.S. stock market (S&P 500) rose around 50%. This period exemplifies the interplay between risk appetite and asset price increases. Since 2022, the U.S. Federal Reserve has maintained a tight monetary policy (QT), but recently, there are market speculations about the resumption of quantitative easing (QE) in mid-2025. Treasury buybacks tend to supply liquidity to the market and lead to a decline in the dollar’s value. A weaker dollar increases investment attractiveness to assets like Bitcoin and Ethereum, which have relative scarcity and decentralization. Indeed, after the massive QE conducted by the Fed during the pandemic when they doubled their assets, Bitcoin’s price rose approximately fivefold (from $8,000 to over $40,000). Currently, the U.S. Treasury is burdened with large-scale issuance of bonds following the debt ceiling raise, and there is a possibility of the Fed supplying liquidity to support this. This could create a favorable environment for the cryptocurrency market. The DeFi (Decentralized Finance) market, which had been in a slump, is also showing signs of recovery. After the Terra-Luna incident and the FTX bankruptcy, DeFi yields had shrunk significantly but recently recovered to around 6-10% levels, particularly around stablecoin-based protocols. Moreover, with anticipations of the approval of Ethereum spot ETFs (exchange-traded funds), institutional funds aiming for stable returns are starting to flow back into some DeFi platforms. According to on-chain data analytics firm Dune Analytics, the Total Value Locked (TVL) in stablecoins within the DeFi market increased by about 18% in Q1 2024 compared to the previous quarter. The revival of stable profit models in the DeFi market can be interpreted as a signal of restoring trust in the broader cryptocurrency ecosystem beyond merely price increases. The three factors—Trump’s market-friendly policies, potential liquidity expansion by the Fed, and the return of DeFi profit models—could all act as favorable signals for the cryptocurrency market. However, various risk factors such as global macro variables and regulatory issues should also be closely watched in this process. The upcoming months are expected to be a critical inflection point for the Bitcoin and Ethereum markets.