QCP Capital analysts have highlighted the current market sentiment and the potential impact of spot Ethereum exchange-traded funds (ETFs) gaining approval, indicating a possible short squeeze scenario that could propel ETH prices back to recent peaks. Despite investor caution surrounding the approval of spot Ethereum ETFs, Ethereum has demonstrated resilience by consistently defending the $2,900 support level throughout the year.

The potential approval of a spot Ethereum ETF has the capacity to catch the market by surprise, potentially triggering a short squeeze and driving Ethereum prices towards recent highs, as noted by QCP Capital. Ethereum has seen peaks of $4,066 since the beginning of the year, reaching an all-time high of $4,891 in November 2021, making the approval of an ETF a significant factor that could reignite bullish momentum in the market.

However, the U.S. Securities and Exchange Commission (SEC) has not provided clear indications regarding the approval of a spot ETH ETF. Bloomberg analyst Eric Balchunas has hinted at the SEC's consideration of Ethereum as a security, suggesting that the chances of approval may be slim. On the other hand, David Han, an analyst at Coinbase, believes that the market may be underestimating both the timing and likelihood of approval, hinting at a potential upside surprise for Ethereum in the near future.

The upcoming decision by the SEC on VanEck's application for a spot Ethereum ETF, scheduled for May 23, is eagerly anticipated by market participants. This decision could have significant implications for Ethereum's price trajectory and market dynamics, potentially paving the way for increased investor interest and activity in the cryptocurrency space. As the market awaits this crucial decision, the potential for a short squeeze scenario remains a key point of interest for traders and investors alike, shaping the narrative around Ethereum's future performance and market outlook.