Bitcoin Bulls Set Sights on $125,000 as US-Iran Peace Talks Fuel Market Optimism

Bitcoin was trading at around $74,700 during Friday's Asian morning session, 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 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 gain, Solana, which rose 2.7% to $87.67, BNB, which added 0.7% to $629.89, and Dogecoin, which saw a 5.6% weekly increase 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. 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 yet to confirm 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 positive headlines, markets appear to be overestimating the likelihood of a deal, which has contributed to the unwinding of the war premium in equities while crude oil remains near $98 and the Strait of Hormuz remains effectively closed. Nevertheless, some traders are focusing on the underlying dynamics driving bitcoin's price action. The deeply negative bitcoin perpetual funding rates, which have reached levels not seen since 2023, suggest that the market is heavily positioned against the cryptocurrency. According to Daniel Reis-Faria, CEO of ZeroStack, 'Funding rates this negative indicate that the market is heavily short. If bitcoin continues to rise despite this, many of these 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. 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. 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 downturn following the Luna and FTX collapses. While these two perspectives may seem conflicting, they can both be true, with a potential short squeeze 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.