Ethereum (ETH) price edged higher on November 23, holding on to support above $2,000 after briefly retesting $1,930 on November 21. In the past week, the price of Ethereum increased by 2.5%, and the total market capitalization increased by 0.5%. This upward trend can be attributed to improving decentralized application (DApp) metrics, increasing protocol fees, and Ethereum’s dominance in the non-fungible token (NFT) market.
In order to assess whether Ethereum can sustain its $2,000 price point, one must consider the impact of the recent regulatory challenges Binance faced following a plea deal with the U.S. Department of Justice (DoJ).
Investors’ fear drops as Ethereum network conditions improve
Binance leads the way in Ethereum spot trading volume, accounting for 30% of Ethereum futures contract holdings. The closure of Binance’s $2.35 billion ETH derivatives contract at short notice could have significant consequences. According to DefiLlama, Binance experienced a net outflow of $1.53 billion between November 21 and 23, although preliminary analysis showed little change in spreads and liquidity.
The regulatory environment presents both risks and opportunities. Some see Binance’s actions as evidence of sufficient reserves, while others are concerned about the $4.3 billion fine faced by Binance and its former CEO Changpeng Zhao “CZ.” Notably, Bitcoin advocate Luke Broyles advised followers to withdraw their Bitcoins from exchanges.
Anyone who claims to know which snowflake causes an avalanche is naive.
But, that #binance The $4.3 billion fine is like a giant snowflake on a big pile of snow.
Follow instructions.
Self-monitoring now.#bitcoin— Luke Broyles (@luke_broyles) November 23, 2023
Even if Binance continues to operate and protect all customer assets, the long-term impact of full compliance and increased scrutiny remains uncertain. Additionally, Binance’s relationship with stablecoin issuers such as Tether (USDT), TrueUSD (TUSD) and Binance USD (BUSD) raises further questions.
Government agencies gained access to previously undisclosed money laundering and terrorism financing operations through Binance, including fiat payment gateways and banking partners, raising the possibility of regulatory action against the stablecoin provider. The news is particularly bad for Ethereum given Binance’s position as the third-largest ETH staker (with $1.24 billion in deposits), according to DefiLlama data.
However, recent regulatory developments have also brought some positives. Binance’s comprehensive compliance measures reduce the risks associated with unregulated exchanges, making it more likely that the U.S. Securities and Exchange Commission (SEC) will approve spot exchange-traded fund (ETF) vehicles for cryptocurrencies. Leading industry mutual fund managers such as BlackRock and Fidelity have recently expressed interest in launching Ethereum spot ETFs.
Additionally, the SEC’s lawsuit filed against Kraken on November 20 classified 16 cryptocurrencies as securities, but not Ethereum (ETH). The omission reduces the likelihood of regulatory action against the Ethereum Foundation and entities involved in the 2015 ICO, providing a glimmer of hope amid regulatory uncertainty.
Ethereum network health and NFT market surge
According to data from DappRadar, which assesses the health of the Ethereum network, the total value locked (TVL) of Ethereum DApps reached $26 billion on November 23, an increase of 5% from the previous week. However, a hack significantly impacted dYdX, causing a 16% reduction in deposits on the protocol.
While Ethereum’s $248 billion market capitalization lags behind Bitcoin’s $728 billion, the two networks generate similar protocol revenue. In the past seven days, the Bitcoin network collected $57.5 million in fees, while Ethereum collected $54.3 million. These figures do not include ecosystem fees for platforms such as Lido, Uniswap or the Maker Protocol.
Ethereum also regained the lead in NFT sales, with transactions reaching $12.6 million in 24 hours. Although Bitcoin briefly took the lead in NFT activity, Ethereum remains the blockchain of choice for prominent NFT projects.
Ethereum’s positive performance on November 23 can be attributed to improving on-chain metrics, rising expectations for spot ETF approval, and reduced regulatory concerns arising from 2015’s ICO.
This article is for general information purposes only and is not intended to be, and should not be construed as, legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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