Bitcoin Eyes $125,000 as US-Iran Peace Talks Fuel Risk-On Sentiment

Bitcoin was trading at approximately $74,700 during Asian morning hours on Friday, experiencing a 0.4% decrease over 24 hours but still maintaining a 3.5% weekly gain, as the 10-day global equity rally paused ahead of the upcoming US-Iran ceasefire deadline. Ether's price dropped 1.4% to $2,327, yet it continued to lead the majors with a 6% weekly gain, extending its outperformance from earlier in the week. Other notable cryptocurrencies 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 reach $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 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 that Tehran had agreed to abandon its nuclear ambitions and reopen the Strait of Hormuz, although Iran has not confirmed these concessions. A separate 10-day ceasefire between Israel and Lebanon was announced, with Israeli Prime Minister Benjamin Netanyahu confirming the truce. Markets are reacting to these developments as if a deal is imminent, which has contributed to equities shedding most of their war premium, while crude oil remains near $98 and the Strait of Hormuz remains effectively shut. Nevertheless, some traders are focused on the underlying dynamics driving bitcoin's price action. Bitcoin's perpetual funding rates have turned deeply negative, reaching levels last seen in 2023, indicating that the market is heavily short-biased. According to Daniel Reis-Faria, CEO of ZeroStack, 'Funding rates this negative signify that the market is heavily short. If bitcoin continues to rise despite this, many of these positions could be liquidated, leading to a rapid acceleration of the move.' Reis-Faria predicts that bitcoin could reach $125,000 within the next 30 to 60 days if the short base is squeezed out. In contrast, 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. Historically, prolonged periods below the True Market Mean have coincided with bitcoin's most challenging periods, including the 2018-19 bear market and the 2022-23 downturn following the Luna and FTX collapses. These two perspectives do not necessarily conflict, as a short squeeze triggered by negative funding and a structural drawdown from underwater holders can both occur, with the former potentially sparking an outsized rally that is later sold into by the latter. The dominant scenario will likely depend on whether the US-Iran ceasefire extension holds beyond next week.