On-chain analytics firm CryptoQuant has warned that ETH prices could fluctuate significantly if pending spot Ethereum ETF applications face uncertainties. They cautioned that ETH might experience a "significant price correction" if the SEC denies these applications or delays the approval process.

Additionally, increased exchange flows could lead to ETH price volatility in the near future. Rumors of pending spot ETH ETF approvals have pushed exchange flows to 62,000 ETH, the highest level since March.

Despite potential setbacks, ETH prices have surged recently, driven by speculation about the SEC approving spot ETFs linked to Ethereum. As of May 22, Ethereum was trading at $3,735, up approximately 21% over 24 hours, according to CryptoSlate data.

CryptoQuant noted that traders have been aggressively opening long positions in the futures market, anticipating higher prices. This activity has pushed ETH open interest from 2.8 to 3.2 million ETH, the highest since January 2023, resulting in a short squeeze and cascading short liquidations.

Long-term ETH holders have also contributed to the price increase by purchasing significant amounts of ETH, with over 100,000 ETH bought in a single day, the highest daily amount since September 2023. The ETH perpetual futures market is dominated by buy orders, with a taker buy/sell ratio above one, adding further upward pressure.

ETH short position liquidations have reached 9,300 ETH, marking the highest hourly volume in 2024 and causing a short squeeze in the futures market.

The SEC's decision on VanEck’s spot ETH ETF proposal is expected on May 23, with similar applications possibly being decided simultaneously. The approval process is ongoing, with Cboe filing 19b-4 rule changes for five ETH ETF issuers on May 21. Nasdaq has also amended filings for BlackRock, and NYSE Arca has updated filings for Grayscale’s Ethereum Mini Trust and Bitwise’s application.

FOX Business reporter Eleanor Terrett mentioned that the SEC and issuers are now discussing S-1 registration statements. Bloomberg ETF analyst James Seyffart believes it may take weeks or months for funds to launch after initial approvals.