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 a spot Ethereum ETF could “easily” send ETH back to recent levels.

While recent market data points to a cautious atmosphere among investors regarding the potential approval of spot Ethereum exchange-traded funds (ETFs), analysts warn that the unexpected approval could trigger a short squeeze that would result in ETH reaching recent highs.

In a recent research report, analysts at QCP Capital noted that the ETH/BTC pair has fallen to levels not seen since February 2021, suggesting that the market is “expecting a rejection and a non-event.” However, QCP Capital notes that Ethereum has shown strong support at the $2,900 level and has maintained this price point multiple times throughout the year.

QCP Capital says that with the current state of the market, confirmation of spot Ethereum ETH could come suddenly and trigger “a short squeeze that could easily take us back to recent highs.” Since January, Ethereum has risen as high as $4,066, but remains below its all-time high of $4,891 set in November 2021. Given this context, an ETF approval could serve as a significant catalyst for renewed bullish momentum and potentially push ETH back towards the right. these levels.

But so far there is no clear signal from the US Securities and Exchange Commission (SEC) that a spot ETH ETF will be approved anytime soon. Bloomberg analyst Eric Balchunas noted in a recent

However, David Han, an analyst at crypto exchange Coinbase, said the market “may be underestimating the timing and likelihood of a potential approval” and that the second-largest cryptocurrency by market cap “may yet have the potential to surprise on the upside.” In the coming months […].”

The SEC is expected to make its decision on VanEck’s spot Ethereum ETF application on May 23.