"If there is no spot Ethereum ETF approval in May, then we assume there is going to be a litigation process after May," Nikolaos Panigirtzoglou, managing director and global market strategist at JPMorgan, told The Block. "We believe that the most likely scenario is that the SEC eventually loses this litigation (similar to what happened with the Grayscale and Ripple legal battles last year), which means that eventually, the SEC will approve spot Ethereum ETFs (but not as soon as this May)."

Notably, Panigirtzoglou has kept the odds of May approval at 50% despite recent reports suggesting the SEC is investigating the Ethereum Foundation and actively seeking to classify ether (ETH) as a security through legal avenues.

Earlier this week, Panigirtzoglou and his team said in a report that Ethereum's easing centralization concerns (such as Lido's decreasing market share) raise the chance that ETH will avoid being designated as a security in the future. The team pointed out that network decentralization plays a role in determining the classification of a digital token as a security, as highlighted by the SEC's release of the "Hinman documents" last June.

Diminished hope for May approval

Several analysts have decreased their optimism regarding the SEC's potential approval for a spot ether ETF by May. Last week, Bloomberg senior ETF analyst Eric Balchunas, for instance, said his odds for May approval remain pessimistic at 25%, down from 70% in January.

The SEC is currently soliciting comments on a handful of spot ETH ETF applications, including from Fidelity, Grayscale and Bitwise. Comments for all three are due later this month.