Cryptocurrency market maker GSR revised its forecast for the approval of a spot Ethereum ETF in May, reducing the probability to just 20%. This is a significant drop from the firm's estimate in January, which put the chance at 75%.

GSR analyst Brian Rudick announced the revised forecast in a note published today, saying, “We now believe there is a 20% chance that the SEC will approve a spot Ethereum ETF in May.” According to GSR Research Analyst Matt Kunke, the previous optimistic outlook was attributed to Grayscale's Court of Appeals victory and the approval of Ethereum Futures ETFs in October.

Rudick noted that the conditions leading to the potential approval of the spot Ethereum ETF are similar to those prior to the approval of spot Bitcoin ETFs. These included the existence of a futures-based ETF and a significant correlation between the spot and futures markets.

However, Rudick has now taken a more conservative view on the potential for spot ETH ETF approvals. He cited minimal interest from the SEC, political pressure against approving additional digital asset ETFs, and an alleged SEC investigation into whether ETH is a security as factors that make approval less likely.

Rudick now predicts that the approval process for spot Ethereum ETFs could take much longer than previously anticipated. “Our best guess is that the process will take much longer and will likely involve litigation, and we now believe spot Ethereum ETFs will likely be approved in 2025-2026,” he added.