Analysts ponder potential short squeeze as spot Ethereum ETF deadline looms.

According to analysts at QCP Capital, there is a noticeable lack of interest in the market, but they believe that the approval of a spot Ethereum ETF could easily push ETH back to its recent highs.

The market data suggests that investors are being cautious about the potential approval of spot Ethereum ETFs, as they anticipate a rejection and a non-event. The ETH/BTC pair has dropped to levels not seen since February 2021, indicating this sentiment. However, Ethereum has consistently found strong support at the $2,900 level throughout the year.

Given the current market state, the approval of a spot Ethereum ETF could come as a surprise and trigger a short squeeze, leading to a return to recent highs, according to QCP Capital. Although Ethereum reached as high as $4,066 in January, it is still below its all-time high of $4,891 from November 2021. Therefore, an ETF approval could serve as a significant catalyst for renewed bullish momentum, potentially propelling ETH back towards these levels.

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 believes that the SEC might be considering Ethereum as a security in their decision-making process, making the odds of approval slim. On the other hand, David Han, an analyst at Coinbase, suggests that the market may be underestimating the timing and likelihood of a potential approval, and he believes that Ethereum still has the potential to surprise positively in the coming months.

The SEC is set to make a decision on VanEck’s application for a spot Ethereum ETF on May 23.