Ethereum’s price has struggled to gain momentum in 2024 and early 2025, leaving investors frustrated. While Bitcoin has managed to climb 8% since the start of the year, Ethereum has lagged, currently sitting at a minor 1.4% loss. However, recent market trends suggest ETH may be gearing up for a significant rally.

One key factor driving speculation of a potential breakout is the mass capitulation among short-term holders. Historically, such events have been followed by major uptrends. If past trends repeat, Ethereum could be on the verge of reclaiming its former glory—and even testing the $5,000 mark in February 2025.

Short-Term Holders Capitulate: A Signal for a Trend Reversal?

Ethereum’s price saw a brief 5.87% surge on January 31, but it quickly retraced to close the day with a modest 1.65% gain. Despite the lack of sustained momentum, this movement triggered an important signal. According to Santiment data, over 601 million ETH were exchanged at a loss, flashing a Network Realized Profit/Loss (NPL) capitulation signal.

Historically, Ethereum’s price has rallied significantly after such capitulations:

• August 5, 2024 – Ethereum jumped 29% in three days following a similar capitulation event.
• September 10, 2024 – ETH initially rose 6% in three days, then extended its gains to 17% within two weeks.
• November 19, 2024 – A minor capitulation resulted in a 33% rally over the next 17 days.

Given these historical precedents, Ethereum’s latest capitulation could indicate a bottom formation and set the stage for a potential uptrend.

MVRV Ratio Suggests ETH Is Undervalued

Another key metric reinforcing Ethereum’s bullish outlook is the Market Value to Realized Value (MVRV) Ratio. This metric tracks whether investors are sitting on profits or losses.

Currently, short-term holders are deep in the red:

• 30-day MVRV: 0.62%
• 60-day MVRV: -3.88%
• 90-day MVRV: -2.36%
• 180-day MVRV: 6.32% (indicating long-term holders are still profitable)

With short-term holders experiencing losses, the likelihood of selling pressure decreasing is high. If demand returns, Ethereum could see a reversal that drives its price toward key resistance levels.

Can Ethereum Hit $5,000 in February?

Ethereum’s daily chart reveals a bullish falling wedge pattern, formed by a series of lower highs and lower lows since December 16, 2024. This technical setup typically signals a breakout to the upside.

If Ethereum follows this pattern, its initial target is $4,000, representing a 17% increase from the current levels. However, ETH must clear several resistance levels before reaching the coveted $5,000 milestone:

1. $3,592 – First key resistance level
2. $3,975 – $4,069 – A crucial barrier to confirm a breakout
3. $4,000 – The psychological level to watch

Once Ethereum surpasses $4,000, it will likely test its all-time high (ATH) of $4,877. A successful break above this level could push ETH past $5,000, a psychological barrier that has eluded it since the 2021 bull run.

What’s Fueling the Bullish Ethereum Outlook?

Several macroeconomic and on-chain factors could support Ethereum’s push toward $5,000:

• Post-Halving Market Trends: Historically, Bitcoin halvings have led to an altcoin season, where ETH and other major cryptocurrencies outperform.
• Ethereum Network Strength: Ethereum continues to dominate the decentralized finance (DeFi) and NFT sectors, driving strong long-term adoption.
• Institutional Interest: With Ethereum ETFs expected to gain approval soon, institutional demand could provide an additional boost.

Final Thoughts: Will ETH Make the Big Move?

Ethereum’s price action over the coming weeks will be crucial. If capitulation signals hold true, ETH could be on track for a significant breakout toward $5,000 in February.

However, the market remains volatile, and external factors—such as macroeconomic conditions and Bitcoin’s price action—will also play a role. If Ethereum clears the key resistance levels, a retest of its ATH and a push to $5,000 could soon become a reality.