Ether’s price has shown resilience, trading slightly higher on November 23 and maintaining support above the $2,000 level. Despite briefly retesting $1,930 on November 21, Ether has experienced a 2.5% increase over the past week. Additionally, the total market capitalization has grown by 0.5%. This upward trend can be attributed to several factors, including improved decentralized applications (DApps) metrics, increased protocol fees, and Ethereum’s dominance in the non-fungible token (NFT) market.
Binance, a leading platform for Ether spot trading volume, recently faced regulatory challenges following its plea deal with the U.S. Department of Justice (DoJ). Binance accounts for 30% of ETH futures contracts’ open interest, making the closure of its $2.35 billion worth of ETH derivatives contracts a potentially significant event. Although initial analyses indicate minimal changes in spreads and liquidity, Binance witnessed net outflows of $1.53 billion between November 21 and November 23, as reported by DefiLlama.
Binance’s actions have presented both risks and opportunities for the cryptocurrency community. Some view Binance’s compliance efforts as evidence of having sufficient reserves, while others remain concerned about the $4.3 billion fine facing the platform and its former CEO, Changpeng “CZ” Zhao. Notably, Bitcoin advocate Luke Broyles recommended followers to withdraw their coins from exchanges.
The long-term effects of full compliance and increased scrutiny in the regulatory landscape remain uncertain, affecting both Binance and the wider cryptocurrency ecosystem. Additionally, the relationship between Binance and stablecoin issuers like Tether (USDT), TrueUSD (TUSD), and Binance USD (BUSD) raises further questions. Government agencies gaining access to previously undisclosed money laundering and terrorist financing operations through Binance increases the likelihood of regulatory actions against stablecoin providers. This news has had a detrimental impact on Ethereum, considering Binance’s significant stake in ETH with $1.24 billion in deposits.
However, recent regulatory developments also offer some positives. Binance’s move towards full compliance reduces the risk associated with unregulated exchanges, making it more likely for the U.S. Securities and Exchange Commission (SEC) to approve spot exchange-traded fund (ETF) instruments for cryptocurrencies. Prominent industry mutual fund managers, such as BlackRock and Fidelity, have expressed interest in launching Ether spot-based ETFs.
Furthermore, the SEC’s lawsuit against Kraken on November 20 excluded Ether (ETH) from the list of cryptocurrencies deemed as securities. This omission provides a silver lining amidst regulatory uncertainties, reducing the likelihood of regulatory actions against the Ethereum Foundation and entities involved in the 2015 initial coin offering (ICO).
Examining the Ethereum network’s health, Ethereum DApps achieved a total value locked (TVL) of $26 billion on November 23, marking a 5% increase from the previous week according to DappRadar. However, a recent hack had a significant impact on dYdX, resulting in a 16% decline in the protocol’s deposits.
While Ether’s market capitalization of $248 billion trails behind Bitcoin’s $728 billion, the two networks generate similar protocol revenues. In the past seven days alone, the Bitcoin network collected $57.5 million in fees, compared to Ethereum’s $54.3 million. It is important to note that these figures exclude ecosystem fees from platforms like Lido, Uniswap, or Maker protocols.
Ethereum has also reclaimed its leadership position in NFT sales, recording $12.6 million in transactions within a 24-hour period. Despite a brief period where Bitcoin led in NFT activity, Ethereum remains the preferred blockchain for prominent NFT projects.
The positive performance of Ethereum on November 23 can be attributed to improved on-chain metrics, growing expectations of spot ETF approval, and reduced regulatory concerns stemming from the 2015 ICO. These factors have contributed to Ether’s ability to maintain its price above $2,000 and continue its upward trajectory.
While Binance’s regulatory challenges have raised concerns and uncertainties within the cryptocurrency market, Ethereum has shown resilience and maintained its position. The impacts of compliance efforts and increased regulatory scrutiny on stablecoin providers and the wider ecosystem remain to be seen. However, the potential approval of Ether spot-based ETFs and the exclusion of Ether from recent SEC lawsuits offer a glimmer of hope amidst the regulatory landscape. Ethereum’s on-chain metrics and dominance in the NFT market further contribute to its positive performance on November 23.
