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

Bitcoin was trading at approximately $74,700 during Asian morning hours on Friday, experiencing a minor 0.4% decline over 24 hours but still maintaining a 3.5% weekly gain, as the 10-day global equity rally paused ahead of the impending US-Iran ceasefire deadline. Meanwhile, Ether dropped 1.4% to $2,327, yet it continues to lead the major cryptocurrencies with a 6% weekly gain, extending its outperformance that emerged earlier in the week. Other notable gains include XRP holding at $1.43 with a 6.4% weekly increase, Solana rising 2.7% to $87.67, BNB adding 0.7% to $629.89, and Dogecoin up 5.6% on 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 achieved 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, a 10-day ceasefire between Israel and Lebanon was announced separately, with Israeli Prime Minister Benjamin Netanyahu confirming the truce in a video message. The market's reaction to these headlines has led to equities unwinding most of the war premium, although crude remains near $98 and the Strait of Hormuz is still effectively closed. Beneath the flat bitcoin price action, some traders are focusing on the setup, particularly the deeply negative bitcoin perpetual funding rates, which have reached levels last seen in 2023. Funding rates turning negative indicate that shorts are paying longs, a scenario that only occurs when the market is heavily positioned against the price. According to Daniel Reis-Faria, CEO of ZeroStack, such negative funding rates suggest the market is heavily short, and if bitcoin continues to rise, it could lead to a rapid acceleration of the price as short positions get liquidated. Reis-Faria predicts that 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's 'True Market Mean' metric, 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 be true, with the former potentially triggering an outsized 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.