As the U.S. Securities and Exchange Commission (SEC) nears its decision deadline on spot Ethereum ETF applications, investors face a critical choice: hold or sell Ethereum? With market sentiment teetering between caution and optimism, expert analysis offers clarity on what’s at stake—and what’s likely to happen next.
The crypto community has been closely monitoring developments, particularly after shifting signals from key analysts and evolving market dynamics. While approval expectations have dimmed, the broader implications for Ethereum’s price, investor behavior, and the digital asset ecosystem remain significant.
What to Expect from the SEC’s Ethereum ETF Decision
The SEC is expected to deliver its verdict on multiple spot Ethereum ETF filings by the end of May 2025. Historically, the agency has approached cryptocurrency-based financial products with regulatory caution, especially when it comes to assets beyond Bitcoin.
Recent updates from Bloomberg Intelligence’s ETF analyst Eric Balchunas indicate a dramatic shift in outlook. Balchunas has revised his approval odds from an earlier 70% down to just 25%, reflecting growing skepticism about near-term regulatory greenlights.
Supporting this view, decentralized prediction markets—crowdsourced platforms where users bet on event outcomes—are showing similarly low confidence. Some platforms estimate the likelihood of approval at as little as 18%, suggesting widespread anticipation of another rejection.
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Lark Davis: Why Rejection Is Already Priced In
Lark Davis, a well-known figure in the cryptocurrency investment space, argues that the market has already absorbed the expectation of denial.
“At this stage, I think the rejection is priced in. No one is expecting an approval right now,” says Davis.
This perspective aligns with the efficient-market hypothesis, which posits that asset prices reflect all publicly available information. If investors widely expect a rejection, then Ethereum’s current price likely accounts for that scenario—limiting downside risk when the decision is officially announced.
Davis highlights that while short-term volatility is inevitable following major regulatory news, the long-term fundamentals of Ethereum remain strong. He notes that an unexpected approval would have a far greater impact than a predictable rejection, potentially triggering a surge in demand and institutional inflows.
Will Ethereum’s Price Drop After Rejection?
One of the most pressing questions for holders is whether Ethereum will suffer a significant price correction post-decision.
Current data suggests otherwise. Despite the looming regulatory uncertainty, Ethereum has delivered impressive performance year-to-date, with gains exceeding 45% in 2025 alone. This resilience underscores growing confidence in Ethereum’s underlying utility—not just as a speculative asset, but as the backbone of decentralized finance (DeFi), non-fungible tokens (NFTs), and smart contract platforms.
Moreover, Ethereum’s network activity remains robust:
- High transaction volume across DeFi protocols
- Continued growth in Layer 2 scaling solutions
- Strong developer engagement and protocol upgrades
These factors contribute to sustained demand independent of ETF approval status.
How Bitcoin Correlates With Ethereum’s Market Movement
Bitcoin and Ethereum often move in parallel, with a historical correlation of around 62% as of mid-April 2025. Given their combined dominance in the crypto market cap, shifts in either asset can ripple across the entire sector.
However, experts note that Ethereum’s value proposition diverges significantly from Bitcoin’s. While Bitcoin is primarily viewed as digital gold or a store of value, Ethereum functions as a programmable blockchain platform—enabling everything from decentralized apps to tokenized real-world assets.
This distinction means that while macro-level sentiment affects both assets, Ethereum’s price trajectory is increasingly influenced by on-chain activity and technological adoption rather than regulatory headlines alone.
Long-Term Outlook: ETF Approval Still Likely—Eventually
Even with a near-term rejection expected, most analysts agree that a spot Ethereum ETF will likely be approved in the future. The path may be slower than hoped, but regulatory precedents—especially after Bitcoin ETFs gained traction—suggest Ethereum won’t be excluded indefinitely.
Key arguments supporting eventual approval include:
- Maturation of custodial and security infrastructure
- Increased transparency in Ethereum’s market structure
- Growing institutional interest in digital asset diversification
Analysts compare the current phase to Bitcoin’s multi-year journey toward ETF acceptance. Just as initial rejections didn’t derail Bitcoin’s long-term growth, Ethereum may follow a similar trajectory—strengthening its position before finally gaining regulatory clearance.
Frequently Asked Questions (FAQ)
Q: Will the SEC reject all spot Ethereum ETF applications in May 2025?
A: While not guaranteed, most experts believe rejection is the most likely outcome due to ongoing regulatory concerns about market manipulation and investor protection.
Q: Is it safe to hold Ethereum after the ETF decision?
A: Yes. Many analysts suggest the negative news is already reflected in the price. Long-term holders may benefit from Ethereum’s ongoing technological development and ecosystem expansion.
Q: Could an unexpected approval cause a price spike?
A: Absolutely. If the SEC surprises markets with an approval, it could trigger rapid buying pressure from institutional investors, leading to a sharp upward movement in price.
Q: How does Ethereum differ from Bitcoin in terms of use cases?
A: Bitcoin primarily serves as a decentralized store of value, while Ethereum enables smart contracts and powers decentralized applications (dApps), DeFi platforms, NFTs, and more.
Q: Are there other catalysts for Ethereum besides ETF approval?
A: Yes. Upcoming protocol upgrades, Layer 2 adoption, tokenization of real-world assets, and increased enterprise usage are all potential drivers of future demand.
Q: Should I sell my Ethereum before the SEC decision?
A: For long-term investors, selling based on expected regulatory news may not be necessary. Short-term traders should assess volatility risks but consider that major downside moves are less likely if the market has already adjusted expectations.
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The absence of a spot Ethereum ETF in May 2025 doesn’t equate to failure—it reflects the cautious pace of financial regulation adapting to innovation. What matters more is how the ecosystem evolves beyond headlines.
Ethereum continues to demonstrate strength through adoption, developer momentum, and resilient price action. Whether or not an ETF arrives this year, these fundamentals support a bullish long-term narrative.
For investors weighing whether to hold or sell Ethereum, the consensus leans toward holding—especially for those focused on technological progress over short-term speculation.
Final Thoughts
The SEC’s decision on spot Ethereum ETFs is undoubtedly a pivotal moment—but not a defining one. Market expectations have adjusted. Investor sentiment remains cautious yet confident. And Ethereum’s network continues to grow.
While regulatory approval would accelerate institutional adoption, it is no longer seen as the sole gateway to value appreciation. The ecosystem's maturity speaks for itself.
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As history shows, breakthrough innovations often face early resistance before achieving mainstream acceptance. Ethereum appears to be following that path—and patient investors may be rewarded in time.
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