Bitcoin Bulls Set Sights on $125,000 Amidst US-Iran Peace Talks

Bitcoin's price hovered around $74,700 in early Asian trading on Friday, down 0.4% over the past day but still up 3.5% for the week, as a 10-day rally in global equities stalled 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. 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 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, 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. Trump claimed that Tehran had agreed to abandon its nuclear ambitions and reopen the Strait of Hormuz, although these concessions have not been confirmed by Iran. 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 appear to be trading on the assumption that a deal is closer than it actually is, which has contributed to 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 dynamics of the bitcoin market, where perpetual funding rates have turned deeply negative, reaching levels last seen in 2023. This indicates that the market is heavily short-biased, with shorts paying longs to keep contract prices aligned with spot prices. According to Daniel Reis-Faria, CEO of ZeroStack, such negative funding rates suggest that the market is heavily positioned against price, and if bitcoin continues to rise, a lot of short positions could get liquidated, leading to a rapid acceleration of the price. Reis-Faria expects bitcoin to potentially 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,' which estimates the average cost basis of active investors, suggests that the average active holder is currently underwater. Historically, 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 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 ultimately gets sold into by the latter. The dominant scenario will likely depend on whether the US-Iran ceasefire extension holds past next week.