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

Bitcoin hovered around $74,700 during Asian morning trading on Friday, marking a 0.4% decline over 24 hours but still up 3.5% for the week, as the 10-day rally in global equities paused ahead of next week's US-Iran ceasefire deadline. Meanwhile, Ether dipped 1.4% to $2,327 but maintained its lead among major cryptocurrencies with a 6% weekly gain, extending its outperformance from earlier in the week. XRP held steady at $1.43 with a 6.4% weekly increase, while Solana rose 2.7% to $87.67, BNB added 0.7% to $629.89, and Dogecoin climbed 5.6% for the week to $0.0976. The MSCI All Country World Index reached a record high on Thursday before slipping 0.1% in Asian trading, and the S&P 500 also hit an all-time high. However, Brent crude fell 1.2% to $98.20 after President Donald Trump expressed optimism about the prospects for a permanent Iran ceasefire, claiming that Tehran had agreed to abandon its nuclear ambitions and reopen the Strait of Hormuz, 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. Markets are reacting to the headlines as if a deal is imminent, which has contributed to equities unwinding most of the war premium, while crude 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 last seen in 2023, indicating that the market is heavily short-biased. When funding rates are negative, shorts pay longs, which only occurs when the market is heavily positioned against the price. According to Daniel Reis-Faria, CEO of ZeroStack, 'such negative funding rates suggest the market is heavily short, and if bitcoin continues to rise despite this, many of those positions could get liquidated, leading to a rapid acceleration of the price.' Reis-Faria predicts that bitcoin could reach $125,000 within the next 30 to 60 days if the short base gets squeezed out. In contrast, on-chain analyst CryptoVizArt notes that bitcoin's 'True Market Mean,' which estimates the average cost basis of active investors by filtering out lost and dormant coins, indicates that the average active holder is currently underwater. Historically, meaningful stretches below the True Market Mean have coincided with bitcoin's worst periods, including the 2018-19 bear market and the 2022-23 downturn following 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 a significant rally that is eventually sold into by the latter. The dominant scenario likely depends on whether the US-Iran ceasefire extension holds beyond next week.