The Ethereum (ETH) market experienced a notable divergence in the past week. While the ETH Smart Money Flow Index showed an 18% net inflow over seven days, ETF data pointed to significant outflows. On-chain analysts highlighted that this indicates a major shift in the activities of large wallets.
ETF outflows meet sharp on-chain accumulation
Recently, Ethereum’s price slipped below the critical $2,200 support level, contributing to a bearish mood in the market. Between May 11 and May 20, a total of $431.86 million worth of ETH was withdrawn from ETF products. Public data and exchange statistics signaled substantial signs of capitulation among investors.
In contrast, the ETH Smart Money Flow Index painted a very different picture. This index tracks the activity of wallets that hold large amounts of ETH and move assets off-exchange. According to the index, these wallets engaged in net buying during nine of the past twelve weeks. In a social media post, analyst Alphractal emphasized that, contrary to the prevailing headlines, major wallets continue to accumulate ETH.
On May 22, Alphractal noted, “While the headlines are negative right now and there’s been $431.86 million in outflows over the last eight sessions, the Smart Money Flow Index is showing a picture no one is talking about.”
The Smart Money Flow Index does not take ETF movements or exchange balances into account. Instead, it focuses purely on how large wallets behave on-chain, typically during market cycle lows. This methodology sets it apart from most traditional monitoring tools.
During the price drop on May 14, the same group of large holders transferred ETH to the Hyperliquid and Base networks. Experts interpret this move not as a direct sale, but as a repositioning within the Ethereum ecosystem.
Mini glossary: Hyperliquid and Base are decentralized networks operating within Ethereum’s ecosystem. Hyperliquid offers on-chain derivatives, while Base is a Coinbase-backed scalability solution built for Ethereum developers.
Large wallet behavior and echoes from the past
On-chain analyst Alphractal pointed out that similar patterns have occurred before. In October 2023, these same wallet groups were accumulating ETH when its price hovered near $1,500, and the asset later surged to $4,100 in the following months. Current activity is being compared to that previous accumulation phase.
| Period | Large Wallet Activity | ETH Price |
|---|---|---|
| October 2023 | Widespread accumulation | $1,500–$4,100 |
| May 2024 | Net buying & transfers to Hyperliquid/Base | Below $2,200 |
Analysis suggests that considering both ETF outflows and Smart Money Flow offers a more balanced view of the Ethereum market. While retail investors and ETF managers tended to sell below $2,200, large wallets with a history of buying near market lows continued to absorb the available supply.
Diverging signals cloud ETH market outlook
The stark contrast between on-chain and ETF data signals a complex situation for Ethereum. If only ETF outflows are monitored, the impression is of strong sell pressure; however, large wallet activity suggests that a phase of accumulation may be underway at current levels.
Experts highlight this divergence, arguing that it’s more productive to analyze the accumulation behavior of large holders than to make short-term price predictions. The main takeaway is that the disconnect between market headlines and on-chain activity warrants close attention.
In his analysis, Alphractal avoided forecasting any rapid price rallies. The key point was that large wallets remain in a net buying position. Beyond today’s headlines, the real dynamics lie in how major holders are maneuvering beneath the surface.
