Bitcoin Prices Eye $125,000 Amid Heavy Shorting and US-Iran Peace Talks

Bitcoin was valued at 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 global equities rally paused ahead of the US-Iran ceasefire deadline next week. 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. XRP maintained $1.43 with a 6.4% weekly increase, Solana rose 2.7% to $87.67, BNB added 0.7% to $629.89, and Dogecoin was up 5.6% for 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 hit an all-time high. Brent crude fell 1.2% to $98.20 after President Donald Trump stated that prospects for a permanent Iran ceasefire were 'looking very good.' However, Tehran has not confirmed the concessions Trump claimed, including giving up nuclear ambitions and reopening the Strait of Hormuz. A separate 10-day ceasefire between Israel and Lebanon was announced, with Israeli Prime Minister Benjamin Netanyahu confirming the truce. Markets are reacting to the headlines as if a deal is closer than it actually is, contributing to equities unwinding most of the war premium while crude remains near $98 and the Strait of Hormuz remains shut. Beneath the stagnant bitcoin price, some traders are focused on the setup. Bitcoin perpetual funding rates have turned deeply negative, reaching levels last seen in 2023. When funding rates are negative, it indicates that shorts are paying longs, which only occurs when the market is heavily positioned against the price. 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-chain analyst CryptoVizArt offers a contrarian view, suggesting that bitcoin's 'True Market Mean,' which estimates the average cost basis of active investors, indicates the average active holder is currently underwater. Historically, meaningful stretches below the True Market Mean have aligned with bitcoin's worst periods. However, 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.