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 dropped 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. Other notable movers 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 surged 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 hit an all-time high. Brent crude fell 1.2% to $98.20 after President Donald Trump expressed optimism about a permanent Iran ceasefire, claiming without evidence that Tehran had agreed to abandon its nuclear ambitions and reopen the Strait of Hormuz. However, 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 imminent, which has contributed to equities unwinding most of the war premium, while crude remains near $98 and the Strait of Hormuz remains effectively shut. Nevertheless, some traders are focusing on the underlying setup, which could potentially trigger a significant price movement. Bitcoin's perpetual funding rates have turned deeply negative in recent sessions, reaching levels last seen in 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 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,' 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 market and the 2022-23 unwind after the Luna and FTX collapses. These two reads are not mutually exclusive, as a short squeeze from negative funding and a structural drawdown from underwater holders can both be true, with the former potentially triggering a 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.