Analysts from QCP Capital have indicated that the imminent decision on the approval of spot Ethereum exchange-traded funds (ETFs) could lead to a significant short squeeze, potentially driving the price of ETH back to recent highs. This prediction comes despite the current cautious sentiment among investors.
In a recent report, QCP Capital analysts highlighted a noticeable lack of interest in the market, particularly concerning the ETH/BTC trading pair, which has fallen to its lowest levels since February 2021. This decline suggests that the market is largely expecting the SEC to reject the spot Ethereum ETF applications, viewing it as a non-event.
However, the analysts noted that Ethereum has shown strong support around the $2,900 level, a price point it has defended multiple times throughout the year. Given this robust support, an unexpected approval of a spot Ethereum ETF could trigger a significant short squeeze, pushing ETH prices back to their recent highs.
Since the beginning of the year, Ethereum has climbed as high as $4,066, although it remains below its all-time high of $4,891 reached in November 2021. In this context, an ETF approval could act as a major catalyst, potentially reigniting bullish momentum and driving ETH prices upward.
Despite these optimistic scenarios, there have been no definitive signals from the U.S. Securities and Exchange Commission (SEC) suggesting an imminent approval. Bloomberg analyst Eric Balchunas recently posted on X that the SEC might still consider Ethereum as a security, indicating that the chances of approval are “slim to none.”
Contrasting this view, David Han, an analyst at Coinbase, argued that the market might be underestimating both the timing and the likelihood of a potential approval. He suggested that Ethereum, the second-largest cryptocurrency by market value, could still surprise to the upside in the coming months.
The SEC is expected to make a decision on VanEck’s application for a spot Ethereum ETF on May 23. This decision is highly anticipated and could have significant implications for Ethereum’s market dynamics.
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