Analysts at crypto trading firm QCP Capital say the unexpected approval of spot Ethereum ETFs could propel ETH price to $5,000 “later in the year.”

The price of Ethereum‘s ETH native cryptocurrency might target the $4,000 mark as a “natural short-term target” should the U.S. Securities and Exchange Commission (SEC) approve spot Ethereum exchange-traded funds (ETFs).

In an analytical update on May 21, analysts at the Singapore-based trading firm stated that the second-largest cryptocurrency by market value could eventually hit $5,000 later this year if the SEC surprises the market with its approval. However, if the financial regulator rejects applications for the ETFs, the market should expect an “ugly move back” to $3,000, where ETH has multiple times demonstrated strong support at the $2,900 level.

“This uncertainty has resulted in higher volatility, but the better trade might be spot-futures basis which is now yielding above 10% again.”

QCP Capital

Following rumors of a potential approval, Ethereum’s price surged nearly 20%, reaching $3,650 on Tuesday. QCP Capital previously cautioned that a “resounding lack of interest” in the market combined with the approval of spot Ethereum ETFs could “easily” boost ETH back to recent highs. The analysts cautioned that an unexpected approval might trigger a short squeeze, pushing ETH to new heights.

However, the SEC may still have a card up its sleeve by introducing a nuanced distinction between Ethereum and staked Ethereum, classifying the latter as a security. According to Alex Thorn, head of research at Galaxy Digital, this strategy would align with the SEC’s ongoing legal battles and investigations, allowing the commission to approve Ethereum ETFs while maintaining its established regulatory stance.