Analysts consider possible short squeeze ahead of spot Ethereum ETF deadline

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.