When we look at market research reports, we see that investors are cautious about spot Ethereum ETF approval. The reason for this caution is that the US Securities and Exchange Commission (SEC) does not give a clear signal on the subject. Some analysts even predict that the SEC may consider Ethereum as a security in its decision-making process and that it is unlikely to be approved.

However, despite this cautious atmosphere, an unexpected approval could cause major shocks in the market. In their recent report, QCP Capital analysts state that the ETH/BTC parity has fallen to levels not seen since February 2021. This suggests that investors are expecting a rejection and no incident. However, analysts also highlight that Ethereum has shown strong support at the $2,900 level throughout the year and has maintained this price multiple times.

Under current market conditions, a surprise spot Ethereum ETF approval could cause a “short squeeze” in the market. A short squeeze means that investors bet that the asset price will fall (open a short position) and if the price rises unexpectedly, they are forced to buy back into the market to reduce their losses. This could push the price of the asset even higher. QCP Capital analysts predict that if this scenario occurs, the Ethereum price could easily return to its recent peaks.

Although Ethereum has rallied as high as $4,066 since January, it remains below the all-time high of $4,891 recorded in November 2021. Spot ETF approval could create renewed bullish momentum in the market and propel Ethereum back towards these levels.

However, in addition to such optimistic scenarios, there are also cautious approaches in the market. Bloomberg analyst Eric Balchunas states that the SEC may consider Ethereum as a security in its decisions and that the probability of approval is quite low. This situation reveals that there is a possibility that the surprise approval that investors expect will not happen.

However, David Han, an analyst at cryptocurrency exchange Coinbase, thinks the market is underestimating the timing and likelihood of a possible approval. Han expresses his views that Ethereum, the second largest cryptocurrency in terms of market value, may surprise on the upside in the coming months.

As a result, the SEC’s decision on May 23 on VanEck’s spot Ethereum ETF application is of critical importance for the cryptocurrency market. While an unexpected approval may create an upward momentum in the market, a rejection decision may strengthen the cautious approach of investors. In this environment of uncertainty, it is important for investors to follow the developments closely and make their decisions by getting professional advice.