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Analysts at QCP Capital say the “resounding lack of interest” in the market and the approval of spot Ethereum ETF could “easily” pump ETH back to recent highs.
While recent market data indicates a cautious atmosphere among investors regarding the potential approval of spot Ethereum exchange-traded funds (ETFs), the unexpected approval could trigger a short squeeze resulting in ETH reaching its recent highs, analysts warn.
In a recent research report, analysts at QCP Capital said the ETH/BTC pair has dropped to levels not seen since February 2021, suggesting the market is “anticipating a rejection and a non-event.” However, QCP Capital notes that Ethereum has demonstrated strong support at the $2,900 level, defending this price point multiple times throughout the year.
With the current market state, the approval of spot Ethereum ETH could come as a bolt from the blue, triggering a “short squeeze taking us easily back to recent highs,” QCP Capital says. Since January, Ethereum has risen as high as $4,066, although it remains below its all-time high of $4,891 set in November 2021. Given this context, an ETF approval could serve as a major catalyst for renewed bullish momentum, potentially driving ETH back toward these levels.
Thus far, however, there are no clear signals from the U.S. Securities and Exchange Commission (SEC) suggesting an imminent approval of a spot ETH ETF. Bloomberg analyst Eric Balchunas said in a recent X post that the SEC might be considering Ethereum as a security in their decision-making process, indicating that the odds of approval are “slim to none.”
Nonetheless, David Han, an analyst at crypto exchange Coinbase, says the market “may be underestimating the timing and odds of a potential approval,” adding that the second-largest cryptocurrency by market value “may yet have the potential to 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.