Bitcoin traded around $74,700 in Asian time on Friday, down 0.4% in 24 hours but up 3.5% for the week, as a 10-day rally in global stocks paused ahead of the expiration of the ceasefire between the United States and Iran next week.
Ether rebounded 1.4% to $2,327, but still leads the majors with a 6% weekly gain, extending its outperformance earlier this week. XRP rose 6.4% for the week to $1.43, Solana rose 2.7% to $87.67, BNB rose 0.7% to $629.89, and Dogecoin rose 5.6% for the week to $0.0976.
The MSCI All Country World Index closed at a record high on Thursday after falling 0.1% in Asian markets. The S&P500 also hit a new all-time high. Brent crude oil fell 1.2% to $98.20 after President Donald Trump said the prospects for a permanent ceasefire with Iran “look very good.”
President Trump has claimed, without evidence, that as part of the deal, Iran agreed to abandon its nuclear ambitions, hand over nuclear material and reopen the Strait of Hormuz. Iran has not confirmed these concessions.
A 10-day ceasefire between Israel and Lebanon was announced separately on Thursday, with Israeli Prime Minister Benjamin Netanyahu confirming the ceasefire in a video message. Market headlines are trading as if a deal is closer than it actually is, which is part of the reason why stocks have unwound much of their war premium even as oil prices remain near $98 and the Strait of Hormuz remains effectively closed.
However, some traders have noted the setup underlying Bitcoin’s flat price movements.
Bitcoin’s perpetual funding rate turned significantly negative in recent trading, reaching levels last seen in 2023. Funding is a perpetual future of periodic payments that are exchanged to match the contract price with cash. If it goes negative, the shorts will pay the longs, but this will only happen if the market is heavily positioned relative to the price.
“Such a negative funding rate indicates a significant market shortage,” ZeroStack CEO Daniel Rice Faria said in a note shared with CoinDesk. “If Bitcoin continues to rise despite this, many of those positions could be liquidated and the movement could accelerate rapidly.”
Rice Faria predicts that once the short base is squeezed out, Bitcoin could reach $125,000 in the next 30 to 60 days.
“It was a reminder that no matter how much short interest there is in the market, that position can be squeezed by the amount of buying pressure, especially from large companies,” he said.
The contrarian read by on-chain analyst CryptoVizArt is that Bitcoin’s “true market average” metric, which estimates the average cost base of active investors by excluding lost and dormant coins, suggests that the average active holder is currently underwater.
Since 2016, significant periods below the true market average have coincided with Bitcoin’s worst periods, including the 2018-19 bearish period (-57% max drawdown, 282 days) and the 2022-2023 unwind after the Lunar and FTX collapses (-56%, 339 days).
There is no need for the two reads to conflict. A short-term squeeze from negative financing and a structural drawdown from underwater holders could both be true, with the former causing a kind of abnormal rally that would eventually be sold off by the latter.
Which scenario prevails is likely to depend on whether the ceasefire extension between the United States and Iran lasts into next week.
