Ethereum (ETH) price briefly retested $1,930 on November 21, before rising slightly on November 23 and maintaining support above the $2,000 level. Over the past week, the price of Ethereum has risen 2.5%, while the overall market capitalization has risen 0.5%. This upward trend can be attributed to improved decentralized application (DApp) metrics, increased protocol fees, and Ethereum’s dominance in the non-fungible token (NFT) market.
To assess whether Ethereum can sustain the $2,000 price range, we need to consider the impact of Binance’s recent regulatory issues following its appeal negotiations with the U.S. Department of Justice (DoJ).
As Ethereum network conditions improve, investor fears decrease.
Binance is the leader in Ethereum spot trading volume, accounting for 30% of ETH futures contract open interest. The termination of Binance’s $2.35 billion worth of ETH derivatives contracts in the short term could have serious consequences. Despite initial analysis showing minimal changes in spreads and liquidity, Binance recorded net outflows of $1.53 billion between November 21 and November 23, as reported by DefiLlama.
The regulatory environment presents both risks and opportunities. While some see Binance’s actions as evidence of sufficient reserves, others are concerned about the $4.3 billion fine faced by Binance and its former CEO Changpeng “CZ” Zhao. In particular, Bitcoin advocate Luke Broyles advised his followers to withdraw their coins from exchanges.
Anyone who claims to know which snowflake will cause an avalanche is naive.
which #Binance A $4.3 billion fine is a really big snowflake on top of a really big snowdrift.
Act accordingly.
Now get your own custody.#Bitcoin— Luke Broyles (@luke_broyles) November 23, 2023
Even if Binance continues to operate and protect all customer assets, full compliance and the long-term impact of increased scrutiny remain uncertain. Additionally, Binance’s relationship with stablecoin issuers such as Tether (USDT), TrueUSD (TUSD), and Binance USD (BUSD) raises additional questions.
Government agencies having access to previously undisclosed money laundering and terrorist financing activities through Binance, including fiat payment gateways and banking partners, increase the likelihood of regulatory action against stablecoin providers. This news is especially detrimental to Ethereum, considering Binance is the third-largest ETH staker, with $1.24 billion in deposits, according to DefiLlama.
However, recent regulatory developments also offer some positive aspects. Binance’s move toward full compliance reduces the risks associated with unregulated exchanges and increases the likelihood that the U.S. Securities and Exchange Commission (SEC) will approve a spot exchange-traded fund (ETF) product for cryptocurrencies. Leading mutual fund managers such as BlackRock and Fidelity have recently expressed interest in launching an Ether spot-based ETF.
In addition, Ethereum (ETH) was excluded from the lawsuit filed by the SEC on November 20 against Kraken, which listed 16 cryptocurrencies as securities. This omission reduces the likelihood of regulatory action against the Ethereum Foundation and entities involved in the 2015 ICO, providing hope amid regulatory uncertainty.
Ethereum Network State and NFT Market Surge
Assessing the state of the Ethereum network, Ethereum DApps achieved a total value locked (TVL) of $26 billion on November 23, a 5% increase from the previous week, according to DappRadar. However, the hack had a significant impact on dYdX, reducing protocol deposits by 16%.
Ether’s market capitalization of $248 billion lags Bitcoin’s $728 billion, but the two networks generate similar protocol revenues. Over the past seven days, the Bitcoin network has collected $57.5 million in fees compared to Ethereum’s $54.3 million. This figure does not include ecosystem fees from platforms such as Lido, Uniswap, or Maker protocols.
Ethereum also regained its lead in NFT sales, recording $12.6 million in transactions in less than 24 hours. Despite the brief period when Bitcoin dominated NFT activity, Ethereum remains the preferred blockchain for major NFT projects.
Ethereum’s positive performance on November 23rd can be attributed to improved on-chain metrics, increased expectations of spot ETF approval, and reduced regulatory concerns stemming from the 2015 ICO.
This article is written for general information purposes and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.