Bitcoin Bulls Set Sights on $125,000 Amid Risk-On Sentiment

Bitcoin was trading at around $74,700 in the Asian morning session on Friday, down 0.4% over the past 24 hours but still up 3.5% for the week, as the 10-day rally in global equities paused ahead of the upcoming U.S.-Iran ceasefire deadline. Meanwhile, Ether declined by 1.4% to $2,327, yet still leads the majors with a 6% weekly gain, extending its outperformance from earlier in the week. Other notable movements include XRP holding at $1.43 with a 6.4% weekly gain, Solana rising 2.7% to $87.67, BNB adding 0.7% to $629.89, and Dogecoin up 5.6% on the week at $0.0976. The MSCI All Country World Index reached a record high on Thursday before slipping 0.1% in Asia, while the S&P 500 also hit an all-time high. However, Brent crude fell 1.2% to $98.20 following President Donald Trump's statement that prospects for a permanent Iran ceasefire were 'looking very good.' Trump claimed, without evidence, that Tehran had agreed to abandon its nuclear ambitions, surrender nuclear material, and reopen the Strait of Hormuz as part of the deal, although Iran has not confirmed these concessions. A separate 10-day ceasefire between Israel and Lebanon was announced on Thursday, with Israeli Prime Minister Benjamin Netanyahu confirming the truce in a video message. Markets are reacting to the headlines as if a deal is closer than it actually is, which has led to equities unwinding most of the war premium, while crude remains near $98 and the Strait of Hormuz is still effectively shut. However, some traders are focusing on the underlying setup, which is the deeply negative bitcoin perpetual funding rates that have reached levels last seen in 2023. Funding rates are the periodic payments that perpetual futures traders exchange to keep contract prices aligned with spot prices. When funding rates turn negative, it means shorts are paying longs, which only occurs when the market is heavily positioned against the price. According to Daniel Reis-Faria, CEO of ZeroStack, 'Funding rates this negative tell you the market is heavily short. If Bitcoin continues to move higher despite that, a lot of those positions could get liquidated, and the move can accelerate quickly.' Reis-Faria expects bitcoin could reach $125,000 in the next 30 to 60 days if the short base gets squeezed out. On the other hand, on-chain analyst CryptoVizArt notes that bitcoin's 'True Market Mean,' which estimates the average cost basis of active investors, suggests the average active holder is currently underwater. Since 2016, periods where the price has been below the True Market Mean have aligned with bitcoin's worst periods, including the 2018-19 bear and the 2022-23 unwind after the Luna and FTX collapses. These two perspectives do not have to be in conflict, as a short squeeze from negative funding and a structural drawdown from underwater holders can both be true, with the former potentially triggering the kind of outsized rally that ultimately gets sold into by the latter. The dominant scenario likely depends on whether the U.S.-Iran ceasefire extension holds past next week.