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

Bitcoin was trading at around $74,700 during Asian morning hours on Friday, experiencing a 0.4% decline over 24 hours but still maintaining a 3.5% weekly gain, as the 10-day rally in global equities paused ahead of the impending US-Iran ceasefire deadline. Meanwhile, ether slipped 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 gains included 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 surging 5.6% on the week to $0.0976. The MSCI All Country World Index reached a record high on Thursday before dipping 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 reacting to the headlines as if a deal is imminent, leading to a partial unwinding of the war premium in equities, although crude remains near $98 and the Strait of Hormuz remains effectively shut. Beneath the flat bitcoin price action, some traders are focusing on the underlying setup, particularly the deeply negative bitcoin perpetual funding rates, which have reached levels not seen since 2023. According to Daniel Reis-Faria, CEO of ZeroStack, such negative funding rates indicate a heavily short-biased market, which could lead to a rapid acceleration of price movement if bitcoin continues to rise and triggers the liquidation of these short positions. Reis-Faria predicts that bitcoin could reach $125,000 in the next 30 to 60 days if the short base is 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, a scenario that has historically aligned with bitcoin's worst periods, including the 2018-19 bear market and the 2022-23 downturn. While these two perspectives may seem conflicting, they can both be true, with a potential short squeeze triggering an outsized rally that is eventually sold into by underwater holders. The dominant scenario will likely depend on whether the US-Iran ceasefire extension holds beyond next week.