Ethereum (ETH) price reclaims $2K as data shows a surge in network activity
Even in the face of regulatory actions against Binance, the Ethereum network experienced a surge in activity. Coupled with the anticipation of a spot ETF approval, these factors contributed to a price surge in Ethereum, pushing it above the $2,000 mark.
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On November 23, Ether's (ETH) price demonstrated resilience by trading slightly higher, maintaining support above the $2,000 level. This followed a brief retest of $1,930 on November 21. Over the past week, Ether's price increased by 2.5%, while the total market capitalization grew by 0.5%. This upward trend can be attributed to improved metrics in decentralized applications (DApps), increased protocol fees, and Ethereum's dominance in the nonfungible token (NFT) market.
The recent regulatory challenges faced by Binance, especially after its plea deal with the United States Department of Justice, introduced uncertainties in the market. Binance leads in Ether spot trading volume, accounting for 30% of ETH futures contracts' open interest. The closure of Binance's $2.35 billion worth of ETH derivatives contracts within a short period could have significant consequences. Despite initial analyses showing minimal changes in spreads and liquidity, Binance witnessed net outflows of $1.53 billion between November 21 and November 23.
The regulatory landscape presents both risks and opportunities. Binance's move toward full compliance reduces the risk associated with unregulated exchanges, making it more likely for the U.S. Securities and Exchange Commission to approve spot exchange-traded fund (ETF) instruments for cryptocurrencies. Major mutual fund managers, such as BlackRock and Fidelity, have expressed interest in launching Ether spot-based ETFs.
However, uncertainties remain regarding the long-term effects of full compliance and increased scrutiny. The relationship between Binance and stablecoins 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 could increase the likelihood of regulatory actions against stablecoin providers.
Recent regulatory developments also offer some positive aspects. The SEC's lawsuit against Kraken on November 20, which lists 16 cryptocurrencies as securities, excludes Ether. This omission reduces the likelihood of regulatory actions against the Ethereum Foundation and entities involved in the 2015 initial coin offering (ICO), providing a silver lining amid regulatory uncertainties.
Assessing the Ethereum network's health, Ethereum DApps achieved a total value locked (TVL) of $26 billion on November 23, representing a 5% increase from the previous week. Despite a hack impacting dYdX and resulting in a 16% decline in deposits, Ethereum reclaimed its leadership position in NFT sales, recording $12.6 million in transactions within 24 hours. The positive performance from Ethereum on November 23 can be attributed to improved on-chain metrics, growing expectations of a spot ETF approval, and reduced regulatory concerns stemming from the 2015 ICO.
