According to analysts at QCP Capital, the market’s apparent lack of enthusiasm combined with the potential approval of a spot Ethereum exchange-traded fund (ETF) could trigger a short squeeze, propelling ETH prices back to recent highs.
Recent market data suggests a cautious sentiment among investors regarding the possible approval of spot Ethereum ETFs. However, analysts caution that an unexpected approval could lead to a short squeeze scenario, driving ETH prices upward to recent peaks.
In a recent research report, QCP Capital highlighted that the ETH/BTC pair has dropped to levels not seen since February 2021, indicating anticipation of a rejection or non-event. Despite this, Ethereum has consistently found strong support around the $2,900 mark throughout the year.
Given the current market conditions, the approval of a spot Ethereum ETF could serve as a surprise catalyst, potentially pushing ETH prices back to recent highs, as per QCP Capital. Ethereum reached highs of $4,066 since January, albeit remaining below its all-time peak of $4,891 achieved in November 2021. An ETF approval might reignite bullish momentum, driving ETH towards these levels once again.
However, there are no clear indications from the U.S. Securities and Exchange Commission (SEC) regarding an imminent approval of a spot ETH ETF. Bloomberg analyst Eric Balchunas suggested in a recent post that the SEC might view Ethereum as a security in their evaluation, indicating slim chances of approval.
Despite this, David Han, an analyst at crypto exchange Coinbase, believes the market could be underestimating the likelihood and timing of approval. He suggests that Ethereum, the second-largest cryptocurrency by market value, might surprise positively in the coming months.
The SEC is expected to reach a decision on VanEck‘s application for a spot Ethereum ETF by May 23.
Summary Review: The looming decision on a spot Ethereum exchange-traded fund (ETF) has injected uncertainty into the market, with analysts speculating on its potential impact. Despite a prevailing cautious sentiment, the approval of such an ETF could trigger a short squeeze, propelling Ethereum prices back to recent highs. While the odds of approval remain uncertain, analysts and industry observers differ in their assessments, with some suggesting slim chances while others hint at the possibility of a positive surprise. As the market awaits the SEC‘s decision, investors are advised to stay vigilant and consider the potential implications for Ethereum‘s price trajectory in the coming months.
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