Ethereum vs. S&P 500: Despite winning, ETH traders are cashing out – Why?

• Ethereum has outperformed the S&P 500 and led several sectors in the cryptocurrency market.
• Lower timeframe sentiment suggested that ETH could experience a minor slide to the downside.

Despite an impressive 58% rally over the past few months, Ethereum’s [ETH] market sentiment has stalled over the past week.

Market activity has slowed down, showing a shift in tone. Still, ETH’s growing dominance may play a key role in sustaining the asset.

ETH captures investor liquidity

Market sentiment favored ETH over the past week, with the asset attracting the most liquidity among major cryptocurrencies.

At the time of writing, ETH outperformed the S&P 500, the stock market index tracking 500 large U.S. companies.

Source: Artemis

According to benchmark data from Artemis, ETH has rallied 19.6%, while the S&P 500 is up only 12.5%, reflecting a notable disparity of 7.1%.

Simultaneously, ETH has outperformed every other sector in the crypto market over recent months, except the NFT ecosystem.

Source: Artemis

The NFT sector has seen an overall increase of 57.7%, based on the calculated weighted average.

While the broader outlook remains bullish, a closer look at lower-timeframe market activity shows a more cautious sentiment.

Zooming in on market activity

Lower timeframe market analysis reveals a notable decline in sentiment, signaling a possible price drop ahead.

Spot market traders have been the primary drivers of this shift, offloading approximately $19 million worth of ETH in the past 24 hours.

Source: CoinGlass

This outflow was accompanied by a decline in the total value locked (TVL) in the Ethereum ecosystem.

At press time, TVL—which measures the total value of assets locked in DeFi protocols— dropped from $64.64 billion on the 14th of May to $61.202 billion on the 18th of May.

This suggests that $3.438 billion worth of ETH has been withdrawn from protocols and likely sold into the market.

Source: DeFiLlama

The key question now is: what happens if ETH continues to trend downward?

ETH could drop — but to what level?

Ethereum’s 24-hour liquidation heatmap suggests a potential price drop, with a significant liquidity cluster located below the current level.

Liquidity clusters are zones with high concentrations of buy or sell orders, attracting price movements. One such cluster sits at $2,477, where approximately $33.06 million in buy orders are likely positioned.

Source: CoinGlass

ETH could rebound from this level and resume its upward trend.

AMBCrypto reports that $32 million worth of ETH has been purchased in the past 24 hours, indicating that any potential decline may be gradual.

This strong liquidity inflow has helped stabilize the price, slowing downward movement.

If buying pressure continues to outweigh bearish outflows, ETH could build a solid defense against further declines.