Bitcoin Prices May Surge to $125,000 as US-Iran Peace Talks Fuel Market Optimism

On Friday, bitcoin was trading at around $74,700, 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 US-Iran ceasefire expiration. Ether dropped 1.4% to $2,327 but maintained its lead among major cryptocurrencies with a 6% weekly gain. Other notable performers included XRP, which held steady at $1.43 with a 6.4% weekly increase, solana, which rose 2.7% to $87.67, BNB, which added 0.7% to $629.89, and dogecoin, which was up 5.6% for 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 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. Despite the headlines, markets are trading as if a deal is closer than it actually is, resulting in equities unwinding most of the war premium while crude remains near $98 and the Strait of Hormuz remains effectively shut. However, some traders are focusing on the underlying setup, which shows bitcoin perpetual funding rates turning deeply negative in recent sessions, reaching levels last seen in 2023. This indicates that the market is heavily positioned against 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 expects bitcoin to potentially reach $125,000 in 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,' a metric estimating the average cost basis of active investors, suggests that the average active holder is currently underwater. Since 2016, meaningful stretches 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 triggering the kind of outsized rally that ultimately gets sold into by the latter. The dominant scenario will likely depend on whether the US-Iran ceasefire extension holds past next week.