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

Bitcoin 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 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 maintained its lead among major cryptocurrencies with a 6% weekly gain, extending its outperformance from earlier in the week. Other notable gains 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 saw a 5.6% weekly increase to $0.0976. The MSCI All Country World Index reached a record high on Thursday before dipping 0.1% in Asian trading, while the S&P 500 also hit an all-time high. Brent crude prices fell 1.2% to $98.20 following President Donald Trump's statement that a permanent Iran ceasefire was 'looking very good', although Tehran has not confirmed the concessions. A separate 10-day ceasefire between Israel and Lebanon was announced, with Israeli Prime Minister Benjamin Netanyahu confirming the truce in a video message. Despite the cautious market reaction, some traders are focusing on the underlying dynamics, particularly the deeply negative bitcoin perpetual funding rates, which have reached levels last seen in 2023. 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, 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. However, 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. Since 2016, periods below the True Market Mean have coincided with bitcoin's worst periods, including the 2018-19 bear market and the 2022-23 unwind after the Luna and FTX collapses. While these two perspectives may seem conflicting, 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.