Bitcoin Bulls Set Sights on $125,000 as US-Iran Peace Talks Fuel Risk-On Sentiment

Bitcoin was trading at around $74,700 in Asian morning hours on Friday, down 0.4% over 24 hours but still up 3.5% on the week, as a 10-day rally in global equities paused ahead of next week's US-Iran ceasefire expiry. Meanwhile, Ether dropped 1.4% to $2,327 but continued to lead the majors on the weekly chart with a 6% gain, extending its outperformance that emerged earlier in the week. Other major cryptocurrencies, including XRP, Solana, BNB, and Dogecoin, also saw weekly gains. The MSCI All Country World Index hit a record high on Thursday before slipping 0.1% in Asia, while the S&P 500 reached 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, Iran has not confirmed the concessions claimed by Trump. A 10-day ceasefire between Israel and Lebanon was announced separately on Thursday, with Israeli Prime Minister Benjamin Netanyahu confirming the truce in a video message. Markets are reacting to the headlines as if a deal is closer than it actually is, which is why equities have unwound most of the war premium while crude remains near $98 and the Strait of Hormuz is still effectively shut. Nevertheless, some traders are focusing on the underlying setup, which could lead to a significant price movement. Bitcoin perpetual funding rates have turned deeply negative, reaching levels last seen in 2023. This means 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 the other hand, on-chain analyst CryptoVizArt notes that bitcoin's 'True Market Mean,' a metric that estimates the average cost basis of active investors, suggests the average active holder is currently underwater. Historically, meaningful stretches below the True Market Mean have aligned with bitcoin's worst periods. The two reads do not have to be in conflict, as a short squeeze from negative funding and a structural drawdown from underwater holders can both be true, with the former triggering the kind of 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.