The approval of spot Ethereum ETFs could significantly boost the price of Ethereum (ETH), with analysts at QCP Capital suggesting it could reach $5,000 by the end of the year.
According to the Singapore-based crypto trading firm, an unexpected approval from the U.S. Securities and Exchange Commission (SEC) could initially push ETH to $4,000 as a “natural short-term target.” In an analytical update on May 21, the firm highlighted the potential for ETH to climb even higher if the SEC surprises the market with its approval. Conversely, a rejection of the ETF applications could lead to a sharp decline, with ETH potentially dropping back to $3,000, a level where it has shown strong support around $2,900.
“This uncertainty has resulted in higher volatility, but the better trade might be spot-futures basis which is now yielding above 10% again,” stated QCP Capital.
Amid rumors of a possible approval, Ethereum’s price surged nearly 20%, reaching $3,650 on Tuesday. QCP Capital previously warned that the combination of a market lacking strong interest and the approval of spot Ethereum ETFs could easily drive ETH back to its recent highs. Analysts also noted that an unexpected approval could trigger a short squeeze, pushing ETH to new heights.
However, the SEC may introduce a nuanced distinction between Ethereum and staked Ethereum, potentially classifying the latter as a security. Alex Thorn, head of research at Galaxy Digital, suggested this strategy would align with the SEC’s ongoing legal battles and investigations, allowing the commission to approve Ethereum ETFs while maintaining its regulatory stance.
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