Ethereum (ETH) has kicked off the new year with a robust recovery, reclaiming the crucial $3,500 support level after a notable 4% rally. Following a turbulent December, where ETH consolidated near $3,300 and saw a decline in investor interest, this upward momentum has drives fresh optimism. With January historically favoring bullish trends, the question remains: Can Ethereum hit $4,000 this month?

What’s Driving Ethereum’s Rally?

Ethereum’s price action over the past few days has been marked by significant technical milestones. On the 12-hour chart, ETH has climbed above key moving averages, including the 20-day, 50-day, and 100-day Exponential Moving Averages (EMAs). This move signals a shift in market sentiment, as the breakout above $3,600 has turned the market structure bullish.

Adding to this momentum, technical indicators such as the Relative Strength Index (RSI) and Chaikin Money Flow (CMF) show promising signs. Both metrics are above their median levels, highlighting strong demand and consistent capital inflows into Ethereum.

Key Levels to Watch

With ETH’s price currently trending upward, immediate resistance levels are set at $3,800 and $4,000. Should the momentum persist, Ethereum could even test higher targets, such as $4,100.

However, it’s essential to consider the downside risks. A drop below $3,500 could invalidate the current bullish setup and potentially drive ETH back to December’s lows around $3,300. This makes $3,500 a critical support level to monitor in the coming days.

Historical Trends Point to Bullish January

Ethereum’s strong start to 2025 aligns with its historical performance during the first quarter of the year. Data from Coinglass reveals that Q1 has consistently been ETH’s best-performing quarter, with average gains of 83%. January and March, in particular, have been standout months, delivering average returns of 21% and 22%, respectively.

These seasonality trends suggest that Ethereum could see significant upward movement if historical patterns repeat. A continuation of the current rally might align ETH with its historical trajectory, setting the stage for a climb toward $4,000 or higher.

Liquidity and Market Dynamics

A closer look at Ethereum’s liquidation heatmap reveals key resistance levels at $3,800, $4,000, and $4,100. On the downside, $3,300 serves as a vital support zone. If ETH’s rally gains further traction, these levels could act as critical points for price action in the short term.

Additionally, liquidity-driven rallies are not uncommon in the crypto market, especially during periods of heightened investor confidence. Ethereum’s recent breakout could attract more traders, amplifying its upward momentum.

Risks and Challenges

Despite the optimism, Ethereum’s journey to $4,000 is not without risks. A decline below $3,500 could signal a loss of bullish momentum, opening the door to further corrections. Broader market factors, including macroeconomic conditions and regulatory developments, could also play a role in shaping ETH’s price trajectory.

Furthermore, profit-taking by short-term investors could create temporary resistance, slowing Ethereum’s climb. However, the token’s strong technical foundation and historical performance suggest that any setbacks may be short-lived.

Conclusion

Ethereum’s recovery in January 2025 has reignited hopes of an extended rally, with $4,000 emerging as a plausible target. Supported by bullish technical indicators and favorable historical trends, ETH appears well-positioned for further gains in the coming weeks.

However, investors should remain vigilant, keeping an eye on critical support levels such as $3,500 and $3,300. While risks remain, Ethereum’s resilience and seasonality trends suggest that the king of altcoins could start the year on a high note, paving the way for a strong Q1 performance.

Post Views: 1