Analysts at QCP Capital suggest that the prevailing market sentiment, coupled with the potential approval of spot Ethereum exchange-traded funds (ETFs), could lead to a short squeeze and propel ETH back to recent highs.

Despite a cautious atmosphere among investors regarding the potential approval of spot Ethereum ETFs, QCP Capital notes that Ethereum has shown resilience, repeatedly defending the $2,900 support level throughout the year.

The approval of a spot Ethereum ETF could catch the market off guard, triggering a short squeeze and potentially driving ETH back towards recent highs, according to QCP Capital. Ethereum has reached highs of $4,066 since January, with an all-time high of $4,891 in November 2021, making an ETF approval a significant catalyst for renewed bullish momentum.

However, there are no clear signals from the U.S. Securities and Exchange Commission (SEC) regarding the approval of a spot ETH ETF. Bloomberg analyst Eric Balchunas suggests that the SEC might be considering Ethereum as a security, indicating slim chances of approval.

David Han, an analyst at Coinbase, believes the market might be underestimating the timing and likelihood of approval. He suggests that Ethereum could surprise to the upside in the coming months.

The SEC is expected to decide on VanEck’s application for a spot Ethereum ETF on May 23.