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

Bitcoin was trading at around $74,700 during Asian morning hours 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 impending US-Iran ceasefire deadline. Meanwhile, Ether dropped 1.4% to $2,327 but continued to lead the majors with a 6% weekly gain, extending its outperformance from earlier in the week. Other notable movers included XRP, which held steady at $1.43 with a 6.4% weekly gain, 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 after President Donald Trump expressed optimism about the prospects for a permanent Iran ceasefire, claiming without evidence that Tehran had agreed to abandon its nuclear ambitions and reopen the Strait of Hormuz. Despite the lack of confirmation from Iran, markets are trading on the assumption that a deal is imminent, which has contributed to the unwinding of the war premium in equities. Nevertheless, the underlying dynamics of the bitcoin market are capturing the attention of traders, particularly the deeply negative perpetual funding rates, which have reached levels last seen in 2023. According to Daniel Reis-Faria, CEO of ZeroStack, such negative funding rates indicate that the market is heavily short-biased, setting the stage for a potential forced unwind if bitcoin prices continue to rise. Reis-Faria believes that if the short base gets squeezed out, bitcoin could reach $125,000 within the next 30 to 60 days. In contrast, on-chain analyst CryptoVizArt suggests that bitcoin's 'True Market Mean,' which estimates the average cost basis of active investors, indicates that the average active holder is currently underwater. Historically, prolonged periods below the True Market Mean have coincided with bitcoin's worst periods, including the 2018-19 bear market and the 2022-23 unwind. While these two perspectives may seem contradictory, they can both be true, with a short squeeze potentially triggering an outsized rally that ultimately gets sold into by underwater holders. The dominant scenario will likely depend on whether the US-Iran ceasefire extension holds beyond next week.