I am not experienced with bettas (I have yet to start a fishless cycle of my tank for the first time) but I did a quick search and found that a bloated betta can be a symptom of a disease called Dropsy. Obviously your betta is not bloated from excessive food (you mentioned fasting your betta), so perhaps dropsy may be the problem? It seems that it is a disease that affects the kidneys. Likely, you did nothing wrong; your betta was sick to begin with.
I have no idea if this is what your fish has, that's just what I found from a quick Google search. I would wait about a week and see if anything improves. I have no idea about the daphnia, but it can't hurt so perhaps it's worth a shot. Keep us updated and don't give up!
page is very helpful. It has a list of common betta diseases, symptoms, and treatments.