On November 23, the price of Ether (ETH) is marginally higher, holding steady above the $2,000 mark after briefly testing $1,930 on November 21. In the past week, Ether’s price has seen a 2.5% increase, accompanied by a 0.5% growth in total market capitalization. This upward trend is attributed to improved metrics in decentralized applications (DApps), heightened protocol fees, and Ethereum’s continued dominance in the non-fungible token (NFT) market.
To gauge the sustainability of Ether at the $2,000 level, it is essential to consider the potential impact of recent regulatory challenges faced by Binance, particularly in light of its recent plea deal with the U.S. Department of Justice (DoJ).
Investor concerns diminish as conditions on the Ethereum network show improvement.
Binance holds the top position in Ether spot trading volume, constituting 30% of ETH futures contracts’ open interest. The closure of Binance’s $2.35 billion worth of ETH derivatives contracts within a short timeframe could carry significant implications. Despite initial assessments indicating minimal changes in spreads and liquidity, Binance experienced net outflows of $1.53 billion from November 21 to November 23, as reported by DefiLlama.
The regulatory landscape introduces both risks and opportunities. Some perceive Binance’s actions as indicative of ample reserves, while others express concern about the $4.3 billion fine looming over Binance and its former CEO, Changpeng “CZ” Zhao. Bitcoin advocate Luke Broyles advised followers to withdraw their coins from exchanges. Even if Binance maintains operations and safeguards all client assets, the long-term repercussions of full compliance and heightened scrutiny remain uncertain. Additionally, questions arise about the relationship between Binance and stablecoin issuers like Tether (USDT), TrueUSD (TUSD), and Binance USD (BUSD).
Government agencies gaining access to previously undisclosed money laundering and terrorist financing operations through Binance, including fiat payment gateways and banking partners, heightens the likelihood of regulatory actions against stablecoin providers. This news has had a particularly adverse impact on Ethereum, given Binance’s standing as the third-largest ETH staker, with $1.24 billion in deposits according to DefiLlama.
However, recent regulatory developments also present positive aspects. Binance’s shift towards full compliance reduces the risk associated with unregulated exchanges, potentially increasing the likelihood of the U.S. Securities and Exchange Commission (SEC) approving spot exchange-traded fund (ETF) instruments for cryptocurrencies. Leading industry mutual fund managers, such as BlackRock and Fidelity, have recently expressed interest in launching Ether spot-based ETFs.
Furthermore, the SEC’s lawsuit against Kraken on November 20, which designates 16 cryptocurrencies as securities, excludes Ether (ETH). This omission diminishes the likelihood of regulatory actions against the Ethereum Foundation and entities involved in the 2015 ICO, providing a positive note amidst regulatory uncertainties.
The Ethereum network’s robustness and a notable upswing in the NFT markets are evident.
Evaluating the well-being of the Ethereum network, Ethereum decentralized applications (DApps) reached a Total Value Locked (TVL) of $26 billion on November 23, marking a 5% rise from the preceding week, as reported by DappRadar. Nonetheless, a hack had a substantial impact on dYdX, leading to a 16% reduction in the protocol’s deposits.
While Ether’s market capitalization of $248 billion lags behind Bitcoin’s $728 billion, the two networks generate comparable protocol revenues. In the last seven days, the Bitcoin network accrued $57.5 million in fees, slightly surpassing Ethereum’s $54.3 million. These figures exclude ecosystem fees from platforms like Lido, Uniswap, or Maker protocols.
Ethereum has also regained its leading position in NFT sales, registering $12.6 million in transactions within a 24-hour period. Despite a brief interval where Bitcoin led in NFT activity, Ethereum remains the favored blockchain for prominent NFT projects.
The positive performance of Ethereum on November 23 can be attributed to enhanced on-chain metrics, growing expectations of spot ETF approval, and diminished regulatory concerns stemming from the 2015 ICO.