KEYTAKEAWAYS
- Silver’s 17% crash reflects weak liquidity and the rapid unwinding of speculative and leveraged positions.
- Uncertainty over Federal Reserve policy and political influence is keeping precious metals highly volatile.
- Bitcoin’s slide toward $70,000 highlights growing risk-off sentiment and pressure across dollar-denominated assets.
CONTENT
Silver plunges 17% as liquidity dries up, leverage unwinds, and a stronger dollar pressures commodities, while Bitcoin tests the critical $70,000 support level.
SILVER PLUNGES 17% AS MARKET LIQUIDITY DRIES UP
Spot silver prices plunged as much as 17% on Thursday, wiping out gains from the previous two days and highlighting the market’s ongoing struggle to find support after a historic sell-off. Christopher Wong, a strategist at OCBC, noted that investor sentiment remains weak across multiple asset classes, while scarce market liquidity has created a negative feedback loop that continues to pressure prices.
Due to its smaller market size and lower liquidity, silver has traditionally been more volatile than gold. In the absence of sufficient buying interest, short-term selling pressure has been significantly amplified. As a result, prices have fallen by more than one-third from their late-January highs.
SPECULATIVE POSITION UNWINDING AND LEVERAGE PRESSURE
The previous surge in precious metals was largely driven by speculative momentum, geopolitical tensions, and concerns over central bank independence. Investors had accumulated substantial long positions and further amplified prices through leveraged exchange-traded products (ETPs) and bullish options.
However, when prices rise too quickly without solid fundamental support, any shift in sentiment can trigger large-scale forced liquidations and stop-loss selling. Analysts at Standard Chartered noted that short-term volatility caused by ETP redemptions was one of the main factors behind the synchronized decline in gold and silver. This technical correction reflects the market’s ongoing process of digesting excessive leverage accumulated earlier.
FEDERAL RESERVE POLICY EXPECTATIONS AND POLITICAL INTERFERENCE
On the macro front, markets are closely watching the policy direction following Kevin Warsh’s nomination as Federal Reserve Chair. President Trump recently stated that further rate cuts are highly likely, which in theory should be supportive for non-yielding assets such as precious metals.
However, concerns over political interference in monetary policy independence have instead increased market uncertainty. Until the policy outlook becomes clearer, gold and silver are expected to remain highly volatile. Despite short-term turbulence, some analysts believe that the structural factors supporting precious metals over the long term have not fully disappeared.
BITCOIN FACES A $70,000 DEFENSE BATTLE
Bitcoin continued to decline this morning, briefly touching a low of $70,701 at the time of writing, placing it dangerously close to the key psychological support level of $70,000. This represents a drop of more than 40% from its peak of around $126,000 in October last year.
In recent months, Bitcoin has largely decoupled from broader market trends. It failed to participate in rallies in gold, silver, and AI-related stocks, yet fully shared in their downturns—deeply disappointing many crypto investors.
Michael Burry, the protagonist of The Big Short, has also issued a fresh warning on Bitcoin. He argued that the recent decline has exposed Bitcoin’s speculative nature and its failure to function as an effective hedge against currency debasement. As prices fall below key thresholds, balance sheet pressures on corporate holders may force further selling, potentially triggering a chain reaction.
STRONGER DOLLAR WEIGHS ON COMMODITIES
As the U.S. dollar edges higher, dollar-denominated precious and base metals are coming under direct pressure. Alongside the simultaneous decline in gold and silver, industrial metals such as copper have also fallen below the $13,000-per-ton threshold amid weak market sentiment.
A stronger dollar has eroded the purchasing power of holders of other currencies, further suppressing momentum for a recovery in commodity markets. Silver is currently trading at around $76.6 per ounce, while gold has slipped to near $4,864. The broader precious metals sector—including platinum and palladium—has likewise entered a synchronized correction.
Bitcoin, which is also primarily priced in U.S. dollars, is facing similar headwinds under these conditions.
