Despite regulatory challenges faced by Binance, the price of Ethereum (ETH) has surged above $2,000 due to increased network activity and expectations of a spot ETF approval.
Ether’s price has increased by 2.5% over the past week, 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.
The closure of Binance’s $2.35 billion worth of ETH derivatives contracts could have significant consequences, as Binance leads in Ether spot trading volume. However, initial analyses show minimal changes in spreads and liquidity. Binance has also witnessed net outflows of $1.53 billion between Nov. 21 and Nov. 23.
The long-term effects of Binance’s regulatory challenges and increased scrutiny remain uncertain. The relationship between Binance and stablecoin issuers raises further questions, as government agencies gaining access to undisclosed money laundering and terrorist financing operations through Binance increases the likelihood of regulatory actions against stablecoin providers.
However, recent regulatory developments 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 ETF instruments for cryptocurrencies. Leading industry mutual fund managers have expressed interest in launching Ether spot-based ETFs.
Assessing the Ethereum network’s health, Ethereum DApps achieved a total value locked (TVL) of $26 billion on Nov. 23, representing a 5% increase from the previous week. Ethereum also reclaimed its leadership position in NFT sales, recording $12.6 million in transactions within 24 hours.
Overall, the positive performance of Ethereum can be attributed to improved on-chain metrics, growing expectations of spot ETF approval, and reduced regulatory concerns stemming from the 2015 ICO.