Ether options traders are anticipating significant market turbulence at the end of May, driven by the looming decisions from the U.S. Securities and Exchange Commission (SEC) on two spot Ether ETF filings.

The SEC faces deadlines on May 23 and May 24 to determine the fate of spot Ether ETF applications submitted by VanEck and ArkInvest/21Shares, respectively. Market sentiment suggests a low probability of approval, with Wintermute OTC Trader Jake Ostrovskis indicating that the market assigns just a 16% chance of these ETFs being approved by the end of the month.

Ostrovskis noted that Ether options implied volatility is expected to spike as the SEC decision dates approach. "There is a slight kink in Ether's implied volatility term structure. Pricing for May 31 sits around 60%, before the market flattens then rises again from June into year-end. This represents an 8-point premium to Bitcoin's volatility pricing, which holds around 52% at the same tenor," Ostrovskis told The Block.

Despite the prevailing expectation of a denial, investors are keenly interested in the SEC’s rationale for its decisions. The reasons provided could offer valuable insights into future regulatory stances and the ongoing debate over whether Ether will ultimately be classified as a security or a commodity.

"Analysts have noticed a hint in one of the SEC’s documents suggesting possible grounds for potential denial—specifically, filing the vehicles as a commodity trust was improper as Ether may turn out to be a security. This adds to the view that the SEC had already made its decision long ago and is now engaging in post hoc rationalization to justify it," Presto Research analysts Peter Chung and Min Jung explained in an email to The Block.

Ether's price has reflected the market's cautious outlook, falling 0.3% in the past 24 hours to trade at $2,904 as of 5:04 a.m. ET, according to The Block’s Price Page. Similarly, the GM 30 Index, which tracks the top 30 cryptocurrencies, declined by 1.02% to 126.92 during the same period.

As the end of May approaches, all eyes will be on the SEC and its impending decisions, which are likely to shape the near-term volatility and long-term regulatory landscape for Ether and the broader cryptocurrency market.