Precious Metals Selloff May Clear Path for Bitcoin Rally
Crypto bulls who believe bitcoin’s next move depends on money leaving overheated precious metals could be about to see their thesis tested.
The metals bubble appears to be bursting. Silver, which reached a record $120 per ounce earlier Friday, has tumbled to $75 in U.S. afternoon trading—a 35% drop. Gold, which briefly hit $5,600 on Thursday, has fallen to $4,718, down 12% for the day.
Silver’s swift reversal erased nearly all of its January gains in just a few hours. While such volatility is familiar to crypto traders, only veterans of the 1980 Hunt Brothers silver saga may recognize this level of metals turbulence.
U.S. equities also sold off, with the Nasdaq down 1.25% and the S&P 500 off 0.9%. Cryptocurrencies, by comparison, have held steady above Thursday’s panic lows. Bitcoin is trading around $83,000, recovering from an overnight low of $81,000.
Market watchers point to President Trump’s nomination of Kevin Warsh as Federal Reserve chair as a potential catalyst. Viewed as a hawkish pick, Warsh’s selection may have prompted broad risk-asset selling.
Crypto Bulls See Opportunity
Paul Howard, director at trading firm Wincent, said commodities’ recent parabolic gains drew risk capital away from crypto markets—a trend that may now reverse. “Cryptocurrency markets have been the victim of capital flowing into the still-popular commodities trade,” he noted.
Interest in crypto options is rising, with February BTC 105,000 calls among the most actively traded contracts. “The outlook reflects what many traders are feeling—a market overdue for a commodity-style catch-up,” Howard added.
Regarding Warsh’s nomination, he said, “What was meant to be a bullish signal coincided with a broad risk sell-off. The reaction may be more of a knee-jerk as markets recalibrate.”
Share this content:
