(ETH) price shot higher over the last 48 hours, driven by favorable regulatory developments that boost the chances of an ether exchange-traded fund (ETF) being approved soon. 

Nevertheless, the chances of a major "buy the rumor, sell the fact" reaction for ETH seem lower compared to , according to a recent Citi report.

Bitcoin dropped 17% after ETF approval due to the hype and leveraged bets. In contrast, the potential approval of an ETH ETF has been less expected, leading to less extreme pre-positioning, the report says.

Upon the release of these reports, ETH futures open interest (OI) and funding rates were subdued compared to previous months. However, OI has started to increase, indicating rising anticipation of a potential ETF approval. 

Net flows into Bitcoin ETFs have been a major driver of returns since their launch in January, explaining much of the cryptocurrency's performance. This trend is likely to continue with the introduction of ETH ETFs, indicating that overall crypto ETF flows will remain important for returns.

Reports indicate that robust conversations are ongoing behind the scenes between regulators and ETF providers, which include nine fund providers with applications pending at various stages. Past approvals for Bitcoin ETFs suggest that simultaneous launches for ETH ETFs are likely.

Historical data from Citi shows that net flows into spot Bitcoin ETFs materially influence cryptocurrency returns. For instance, net BTC ETF inflows totaled $12.9 billion through May 20, translating to a roughly 6% rally in Bitcoin per $1 billion of flow. Assuming similar market-cap-adjusted flows for ETH, estimated inflows could range between $3.8 billion to $4.5 billion, potentially driving ETH prices up by 23-28%.

Several factors could impact these estimates, including differing demand for ETH compared to BTC, rotation from BTC to ETH among existing ETF holders, outflows from existing ETH funds upon conversion, and rapid positioning build-up ahead of SEC approval.

In the long term, Citi analysts said that Bitcoin and Ethereum are expected to remain highly correlated, driven by macroeconomic factors. Despite differing on-chain activity and potential use-cases, such as Bitcoin's role as "digital gold" and Ethereum's smart contract functionality, sentiment, adoption, and further use-case development remain crucial for both cryptocurrencies.

"We expect the major tokens to remain highly correlated and continue to be driven by macro forces over the longer term," Citi memo concludes.