Ethereum Reaches New Highs as Network Activity Surges

Ether (ETH) price has been trading slightly higher on Nov. 23, keeping its support above the $2,000 mark after a brief retest of $1,930 on Nov. 21. Over the past week, Ether’s price has increased by 2.5%, while the total market capitalization has grown by 0.5%. This uptrend can be attributed to improved decentralized applications (DApps) metrics, increased protocol fees, and Ethereum’s dominance in the non-fungible token (NFT) market.

To evaluate whether Ether can sustain its $2,000 price point, one must consider the implications of Binance’s recent crypto money laundering challenges following its plea deal with the U.S. Department of Justice (DoJ).

Investor fear drops as Ethereum network conditions improve

Binance has been leading the way 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 in a short period could have significant repercussions. Although preliminary studies showed minimal changes in spreads and liquidity, Binance experienced net outflows of $1.53 billion between Nov. 21 and Nov. 23, according to DefiLlama.

The regulatory environment presents risks and opportunities. Some view Binance’s steps as proof of sufficient reserves, while others are concerned about the $4.3 billion penalty faced by Binance and its former CEO, Changpeng “CZ” Zhao. Notably, Bitcoin promoter Luke Broyles advised his followers to withdraw their coins from exchanges.

Even if Binance continues operations and protects all customer assets, the long-term effects of full compliance and increased oversight are still uncertain. Moreover, the relationship between Binance and stablecoin issuers such as Tether (USDT), TrueUSD (TUSD) and Binance USD (BUSD) raises further questions.

The potential of government agencies to gain access to undisclosed money laundering and terrorist financing operations through Binance, including fiat payment gateways and banking partners, increases the likelihood of regulatory actions against stablecoin providers. This news has been particularly damaging to Ethereum, given Binance’s position as the third-largest ETH staker, with $1.24 billion in deposits according to DefiLlama.

Nevertheless, 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 recently expressed interest in launching Ether spot-based ETFs.

Moreover, the SEC’s lawsuit against Kraken on Nov. 20, which lists 16 cryptocurrencies as securities, excludes Ether (ETH). This omission reduces the likelihood of regulatory actions against the Ethereum Foundation and entities involved in the 2015 crypto ICO, providing a glimmer of hope amidst regulatory uncertainties.

Ethereum network health and NFT markets surge

Analyzing the well-being of the Ethereum network, DappRadar reported a total value locked (TVL) of $26 billion on Nov. 23, indicating a 5% rise from the prior week. Unfortunately, a hack had a substantial effect on dYdX, leading to a 16% decrease in the protocol’s deposits.

Although Ether’s market capitalization of $248 billion is lower than Bitcoin’s $728 billion, the two networks generate similar protocol revenues. During the last seven days, the Bitcoin network earned $57.5 million in fees, compared to Ethereum’s $54.3 million. These figures do not contain ecosystem fees from platforms like Lido, Uniswap, or Maker protocols.

Ethereum also regained its leadership position in NFT sales, recording $12.6 million in transactions within 24 hours. Despite a brief period where Bitcoin was in the lead in NFT activity, Ethereum is still the favored blockchain for distinguished NFT projects.

The optimistic performance from Ethereum on Nov. 23 can be attributed to enhanced on-chain metrics, increasing expectations of spot ETF approval and reduced regulatory worries stemming from the 2015 ICO.