Bitcoin Bulls Eye $125,000 as US-Iran Peace Talks Fuel Risk-On Sentiment

Bitcoin was trading at around $74,700 during Asian morning hours on Friday, experiencing a minor 0.4% drop over the past 24 hours but still maintaining a 3.5% weekly gain, as the 10-day global equity rally paused ahead of the looming US-Iran ceasefire deadline. Meanwhile, Ether saw a 1.4% decline to $2,327, yet it continues to lead the major cryptocurrencies with a 6% weekly gain, extending its outperformance from earlier in the week. Other notable movements include XRP holding steady at $1.43 with a 6.4% weekly increase, Solana rising 2.7% to $87.67, BNB adding 0.7% to $629.89, and Dogecoin surging 5.6% on the week to $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 achieved an all-time high. However, Brent crude fell 1.2% to $98.20 following President Donald Trump's statement that a permanent Iran ceasefire was 'looking very good,' despite lacking evidence. Trump claimed 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, with Israeli Prime Minister Benjamin Netanyahu confirming the truce in a video message. The market is reacting to these developments as if a deal is imminent, leading to the unwinding of most war premiums in equities, while crude oil remains near $98 and the Strait of Hormuz remains effectively closed. Nevertheless, some traders are focusing on the underlying setup, which could lead to a significant price movement. Bitcoin's perpetual funding rates have turned deeply negative, reaching levels not seen since 2023. This indicates that the market is heavily positioned against the price, with shorts paying longs. 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 predicts that 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 that the average active holder is currently underwater. Historically, meaningful stretches below the True Market Mean have aligned with bitcoin's worst periods, including the 2018-19 bear market and the 2022-23 unwind after the Luna and FTX collapses. These two perspectives do not necessarily conflict, as a short squeeze from negative funding and a structural drawdown from underwater holders can both occur, with the former potentially triggering an outsized rally that ultimately gets sold into by the latter. The dominant scenario likely depends on whether the US-Iran ceasefire extension holds past next week.