As the cryptocurrency market eagerly awaits the SEC's decision on spot Ethereum ETF applications, option traders are preparing for increased volatility in late May. With the SEC facing deadlines of May 23 and May 24 to make a final ruling on applications submitted by VanEck and ArkInvest/21 Shares, the chances of approval are slim, according to analysts and investors.

Speaking to The Block, Wintermute OTC analyst Jake Ostrovskis revealed that the market believes ETH ETFs have a 16% chance of being approved by the end of May. However, investors are more curious about the SEC's reasoning behind the potential rejection, as it could have significant implications for Ethereum's classification as a security or a commodity.

Presto Research analysts Peter Chung and Min Jung noted that the SEC's decision may have been made well in advance, with the ETF application process serving as a means to legitimize the regulator's stance on Ethereum's status. This revelation has sparked speculation among market participants about the SEC's true intentions and the future of Ethereum's regulatory landscape.

As the deadline approaches, option traders are bracing for volatility in the Ethereum market. The strong possibility of ETF rejection has led to increased trading activity and anticipation of price fluctuations. Investors are closely monitoring the SEC's statements, as they will provide crucial insights into the regulator's perspective on Ethereum and its potential impact on the broader cryptocurrency ecosystem.

The SEC's decision on spot Ethereum ETFs is a pivotal moment for the crypto industry, with far-reaching implications for the future of digital asset regulation. As the deadline looms, option traders remain vigilant, ready to navigate the potential volatility and capitalize on the opportunities that may arise from the SEC's highly anticipated ruling.