David Han, an analyst at Coinbase, suggests that the chance of a spot Ethereum (ETH) exchange-traded fund (ETF) approval might be higher than the market expects, despite the prevailing belief that such approval isn't imminent. Han argues in a recent report that Ethereum's outlook could be positive due to the absence of significant supply-side pressures like token unlocks or miner sell-offs.

The Securities and Exchange Commission (SEC) has important decision deadlines on May 23 and 24 regarding the approval of spot Ethereum ETF applications submitted by VanEck and ArkInvest/21 Shares. Even though expectations for approval this month are low, with Bloomberg’s Eric Balchunas rating the odds as “slim to none,” Coinbase maintains that a U.S. spot Ethereum ETF approval is inevitable. It contends that the reasoning used for spot Bitcoin ETF approvals applies to Ethereum, given the high correlation between CME futures and spot prices.

Remaining reasons for potential disapproval are likely to be related to differences between Ethereum and Bitcoin, particularly Ethereum’s proof-of-stake mechanism. Since there's a lack of regulatory clarity on staking, Coinbase believes spot Ethereum ETFs incorporating staking rewards are unlikely to be approved soon. Ark Invest’s recent decision to remove staking from its application is seen as a move that won’t affect unstacked ether’s prospects.

The decentralized prediction market Polymarket gives a 16% probability to a May approval, while the Grayscale Ethereum Trust (ETHE) trades at a 24% discount to net asset value. However, Coinbase estimates the approval odds at 30-40%, considering crypto’s increasing political significance and potential litigation if denials occur. Additionally, Balchunas highlighted a detail in a recent ETF filing suggesting the SEC might be considering ether security, which could influence ETF approval decisions.