Analysts at crypto trading firm QCP Capital suggest that the unexpected approval of spot Ethereum ETFs could drive the price of ETH to $5,000 “later in the year.”
According to the analysts, if the U.S. Securities and Exchange Commission (SEC) approves spot Ethereum exchange-traded funds (ETFs), the price of Ethereum’s native cryptocurrency, ETH, could initially aim for the $4,000 mark as a “natural short-term target.”
In an analysis released on May 21, the Singapore-based trading firm stated that the second-largest cryptocurrency by market value could potentially hit $5,000 later this year if the SEC surprises the market with its approval. However, if the financial regulator rejects the ETF applications, the market might see a sharp drop back to $3,000, where ETH has shown strong support around the $2,900 level multiple times.
“This uncertainty has resulted in higher volatility, but the better trade might be spot-futures basis, which is now yielding above 10% again,” noted QCP Capital.
Following rumors of a possible approval, Ethereum’s price surged nearly 20%, reaching $3,650 on Tuesday. QCP Capital had previously warned that a “resounding lack of interest” in the market, combined with the approval of spot Ethereum ETFs, could “easily” drive ETH back to its recent highs. The analysts cautioned that an unexpected approval could trigger a short squeeze, pushing ETH to new heights.
However, the SEC might introduce a nuanced distinction between Ethereum and staked Ethereum, potentially classifying the latter as a security. According to Alex Thorn, head of research at Galaxy Digital, this approach would align with the SEC’s ongoing legal battles and investigations. This strategy could allow the commission to approve Ethereum ETFs while maintaining its regulatory stance.
Summary Review: The potential approval of spot Ethereum ETFs by the SEC is creating significant speculation and volatility in the market. While the approval could propel ETH to new highs, the uncertainty and possible regulatory distinctions continue to keep investors on edge.
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