As the U.S. Securities and Exchange Commission (SEC) nears its decision deadline on spot Ethereum ETF applications, investors face a critical question: Should you hold or sell Ethereum? With market sentiment hanging in the balance, expert analysis offers clarity on what to expect—and how to position your portfolio accordingly.
The crypto world has been abuzz with speculation over whether the SEC will approve a spot Ethereum ETF by the end of May 2025. While anticipation was high earlier in the year, recent shifts in analyst sentiment suggest a growing likelihood of rejection. Yet, as history has shown, markets often price in expectations well in advance—raising questions about how much impact the final decision will truly have.
Market Expectations: Rejection Likely
Leading financial analysts now believe that approval for a spot Ethereum ETF is unlikely in the short term. Eric Balchunas, a senior ETF analyst at Bloomberg, has significantly revised his forecast—dropping his approval odds from 70% to just 25%. This sharp reversal reflects increasing skepticism about regulatory willingness to greenlight another major crypto-based financial product so soon after Bitcoin ETFs launched.
Supporting this view, decentralized prediction markets are also signaling low confidence. Platforms tracking real-time sentiment show approval probabilities as low as 18%, indicating that most traders and investors expect a denial.
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Despite these headwinds, experts emphasize that this anticipated rejection may already be reflected in current Ethereum prices—a key concept rooted in financial theory.
Lark Davis: “The Rejection Is Priced In”
Lark Davis, a well-known figure in the cryptocurrency investment community, argues that the market has already absorbed the risk of an SEC rejection.
“At this stage, I think the rejection is priced in. No one is expecting an approval right now,” says Davis.
His perspective hinges on the efficient-market hypothesis, which posits that asset prices reflect all available public information. If investors widely expect a denial, then Ethereum’s current valuation likely accounts for it—limiting the potential for dramatic downside when the official announcement arrives.
Davis notes that while there could be some short-term volatility following the SEC’s decision, the long-term fundamentals of Ethereum remain strong. In fact, he suggests that an unexpected approval would have a far greater bullish impact than a predictable rejection would have bearish consequences.
This distinction is crucial: surprises move markets more than expected outcomes.
Ethereum vs. Bitcoin: Correlation and Market Influence
Ethereum and Bitcoin often move together, with their price correlation sitting around 62% as of mid-April 2025. Given their dominance in the crypto market cap rankings, movements in either asset can ripple across the entire digital asset ecosystem.
However, Ethereum stands apart due to its unique role as the leading platform for decentralized applications (dApps), smart contracts, and blockchain innovation. Unlike Bitcoin, which primarily functions as digital gold or a store of value, Ethereum serves as infrastructure for DeFi, NFTs, and Web3 development.
Because of this utility-driven model, Ethereum’s price dynamics aren’t solely dependent on ETF approvals. Its year-to-date gain of 45%—achieved without a spot ETF—demonstrates strong organic demand and investor confidence in its technological roadmap.
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Long-Term Outlook: Approval Likely—Just Not Now
While May 2025 may not bring the ETF approval many hoped for, experts agree that it's likely only a matter of time. Regulatory hesitation doesn’t equate to permanent rejection. The SEC’s cautious stance stems from concerns over market manipulation and investor protection—not necessarily opposition to crypto itself.
Analysts draw parallels between Ethereum’s current situation and Bitcoin’s multi-year journey toward ETF approval. It took nearly a decade of legal battles and repeated filings before spot Bitcoin ETFs were finally authorized. Ethereum may follow a similar path.
In the long run, institutional demand for diversified crypto exposure remains strong. Once regulatory frameworks mature and surveillance-sharing agreements improve, the path to approval will likely clear.
Frequently Asked Questions
Will an SEC rejection cause Ethereum’s price to crash?
Most experts believe a crash is unlikely. Since the market has already priced in a rejection, any negative impact should be limited to short-term volatility rather than sustained downward pressure.
How does an Ethereum ETF differ from a futures-based ETF?
A spot ETF holds actual Ethereum tokens, offering direct exposure to price movements. In contrast, a futures-based ETF tracks Ethereum futures contracts, which can deviate from spot prices due to contango or backwardation.
What happens if the SEC delays its decision instead of rejecting outright?
A delay would likely be interpreted positively by the market, suggesting ongoing dialogue between regulators and issuers. It could maintain bullish momentum by keeping approval hopes alive.
Can Ethereum succeed without an ETF?
Absolutely. Ethereum’s growth is driven by real-world adoption—DeFi protocols, NFT marketplaces, Layer-2 scaling solutions, and enterprise use cases—all of which contribute to network value independently of financial products like ETFs.
When might we see a spot Ethereum ETF approved?
While no one can predict with certainty, many analysts estimate approval could come between late 2025 and 2027, depending on regulatory developments and market maturity.
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Final Thoughts: Hold with Confidence
The bottom line? While the SEC’s upcoming decision on spot Ethereum ETFs is important, it shouldn’t dictate your entire investment strategy. The consensus among experts is clear: short-term noise shouldn’t overshadow long-term fundamentals.
Ethereum continues to lead in blockchain innovation, developer activity, and decentralized finance adoption. Its performance year-to-date proves resilience even in uncertain regulatory environments.
For investors asking whether to hold or sell—holding appears to be the more strategic choice, especially for those with a medium- to long-term horizon. A temporary setback in ETF approval doesn’t diminish Ethereum’s core value proposition.
As always, diversification, risk management, and staying informed remain essential components of successful crypto investing.
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