Ethereum Maintains $2000 Mark Amid Binance's Legal Woes and Improved Network Metrics
Summary:
On November 23, Ether (ETH) continues to trade above $2,000, witnessing a rise of 2.5% in past week. The cryptocurrency's uptrend is linked to improved decentralized applications metrics, increased protocol fees, and Ethereum's dominance in the NFT market. The article discusses the recent legal issues faced by Binance and its impact on the crypto market. Despite concerns, Ethereum network health has improved and the total value locked in Ethereum DApps spiked to $26 billion. Ethereum also retained its leadership position in NFT sales.
On November 23, Ether (ETH) is still trading above the mark of $2,000 despite briefly sliding down to $1,930 on Nov. 21. Accompanying its 2.5% climb this past week, the cryptocurrency's total market value also grew by half a percent. Key contributors to this upward trajectory include enhanced decentralized applications (DApps) statistics, hikes in protocol fees, and Ethereum's stronghold over the non-fungible token (NFT) marketplace.
Determining if Ether can continue its hold on the $2,000 price level involves evaluating the consequences of Binance's recent legal issues in light of its settlement with the U.S. Department of Justice (DoJ).
Investors' concerns have eased as conditions within the Ethereum network see improvements. Binance is leading the way in Ether spot trading volume, accounting for almost a third of all open ETH futures contracts. Closing Binance's vast ETH derivatives contracts worth $2.35 billion over a short time could trigger significant impacts.
Despite negligible changes in liquidity and spreads thus far, Binance experienced substantial outflows amounting to $1.53 billion between Nov. 21 and Nov. 23 as per DefiLlama.
There are differing perspectives on the latest regulatory environment. Some people see it positively, viewing Binance's moves as proof of its strong reserves. Others, however, are worried about the hefty $4.3 billion fine imposed on Binance and former CEO Changpeng "CZ" Zhao. Renowned Bitcoin enthusiast, Luke Broyles, recently urged users to withdraw their digital assets from exchanges.
Even if Binance continues operations and protects clients' assets, uncertainties remain over the long-term implications of complete regulatory compliance and heightened scrutiny. Moreover, questions arise over Binance’s association with stablecoin issuers including Tether (USDT), TrueUSD (TUSD), or Binance USD (BUSD).
Risks increase with government agencies gaining previously withheld information on money laundering and terrorist financing activities via Binance. Given Binance's position as the third-largest staker of ETH with deposits amounting to $1.24 billion according to DefiLlama, this news is particularly damaging for Ethereum.
However, there’s some positive news amidst these regulatory developments. Binance’s steps towards comprehensive regulatory compliance reduce potential risks from unregulated exchanges. It paves the way for the U.S. Securities and Exchange Commission (SEC) to greenlight the launch of spot exchange-traded fund (ETF) instruments for digital currencies — a notion that has caught the eye of top mutual fund managers like BlackRock and Fidelity.
Another assurance for Ethereum comes from the SEC's recent lawsuit against Kraken. Ether is not among the 16 listed cryptocurrencies, lowering the risk of regulatory actions against Ethereum Foundation and the entities involved in its 2015 initial coin offering.
In terms of Ethereum network health, Ethereum DApps achieved a total value locked (TVL) of $26 billion on Nov. 23, displaying a 5% surge from the past week as per DappRadar. However, a breach affected dYdX protocol, leading to a 16% reduction in deposits.
Though Ether's market value of $248 billion lags behind Bitcoin's $728 billion, the two networks generate similar revenues from protocols. For the past week, the Bitcoin network amassed $57.5 million in fees, slightly more than Ethereum's collection of $54.3 million. This does not factor in ecosystem fees collected by platforms like Lido, Uniswap, or Maker.
Notably, Ethereum regained its top spot in NFT sales, showing $12.6 million in transactions within a single day. Ethereum remains the first choice for renowned NFT projects despite Bitcoin's temporary lead in NFT activity.
The positive performance of Ethereum on Nov. 23 can be attributed to better on-chain metrics, anticipations of spot ETF sanctions, and reduced regulatory concerns originating from the 2015 ICO.
Published At
11/23/2023 10:41:42 PM
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