Cryptocurrency Resurgence: Binance Appeal Sparks Optimism for Spot ETFs, Bitcoin and BNB Rally

In recent developments, industry analysts are suggesting that the decline of Binance may have inadvertently increased the likelihood of approval for spot-based Bitcoin exchange-traded funds (ETFs). The aftermath of Binance CEO Changpeng "CZ" Zhao's admission of guilt and the subsequent settlement of criminal charges against the exchange seems to have positively influenced the potential approval of a spot-based Bitcoin ETF in the United States.

As of the latest update, Bitcoin (BTC) has shown signs of recovery, hovering around $36,400, rebounding from a 4.5% decline to $35,700 observed the previous Tuesday. Similarly, BNB has seen improvement, trading at $234 after bouncing back from an overnight low of $223. Despite this upward movement, both cryptocurrencies still reflect a 3.3% and 11.5% decrease on a 24-hour basis, underscoring the lasting impact of Binance's substantial $4.3 billion settlement for violating sanctions and money-transmitting laws. CZ, the founder of Binance, has pleaded guilty and stepped down as CEO, marking one of the most significant corporate penalties.

Recently unsealed documents have shed light on Binance's illicit reliance on U.S. customers for a substantial portion of its revenue and trading activities. The criminal complaint exposes years of compliance failures and intentional obfuscation to protect these essential yet restricted users. CZ's legal team has indicated a 6-month delay in his sentencing, and he has agreed to waive his right to appeal if the sentence does not exceed 18 months.

Despite the negative aftermath of Binance's actions, some traders see CZ's downfall as a potential positive turn of events. They believe it could increase the likelihood of the U.S. Securities and Exchange Commission (SEC) approving one or more spot Bitcoin ETFs in the coming months.

Matrixport, a crypto services provider, shared its perspective in a Telegram message, stating, 

"With this plea deal, the expectations for a spot Bitcoin ETF might have increased to 100% as the industry will be forced to follow the rules that TradFi firms must follow. More importantly, this industry's whitewashing will strengthen the Bitcoin adoption case for institutional players and will likely become a safe-haven asset in investors’ portfolios."

Binance uncertainty out of the way, its activities will now be monitored by an independent compliance monitor.

=> Much higher ETF approval odds

Waiting for the market to agree with me that this is actually bullish. https://t.co/OzReCqeOkP

— Alex Krüger (@krugermacro) November 22, 2023

However, the regulatory actions against Binance and CZ have induced price volatility, adversely affecting leveraged traders. Coinglass data reveals that within the 12 hours following the settlement announcement, $110 million in bitcoin long positions were liquidated compared to $37.2 million in short positions. Interestingly, in the subsequent hour, this trend reversed, with $4.26 million in short positions being liquidated compared to $111,000 in longs.

BNB, less actively traded than bitcoin due to most users staking it, witnessed the liquidation of $3.73 million in long positions compared to $1.61 million in short positions, according to Coinglass. Options volume for BNB surged by 68% to $2.41 million, while options open interest increased by 29% to $3.47 million. These market dynamics underscore the ripple effects of the recent developments in the crypto landscape.

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