Silver plunges 26% and gold 9% in one-day crash after Chinese speculation and Warsh Fed news
Silver plunged 26% and gold fell 9% in a record single-day selloff after weeks of momentum-driven buying led largely by Chinese speculators. Prices had been pushed to unprecedented highs—gold briefly near $5,595/oz and silver above $121—fueled by retail buying, options activity, trend-following algos and heavy turnover in the iShares Silver Trust (SLV), which recorded over $40 billion in single-day volume. The rout accelerated after reports that President Trump intended to nominate Kevin Warsh as Federal Reserve chair, which strengthened the dollar and prompted Chinese profit-taking. The crash exposed the shift from fundamental to momentum trading, extreme leverage from options, and the smaller market depth of silver (annual supply value ~$98bn versus gold’s ~$787bn). Short-term effects included frantic cross-timezone trading, squeezed hedges, and sharply increased volatility; liquidity strains were visible in Asian and European trading, though panic selling was limited in some physical markets (e.g., Shuibei). Key figures and datapoints: silver -26% single day, gold -9% single day, SLV >$40bn turnover, silver peak >$121/oz, gold peak ~$5,595/oz, copper spike to $14,527.50/ton. Traders should watch Chinese reopening of trade (Shanghai session), exchange contract limits, option open interest, dollar strength, and Fed communication for near-term price direction.
Bearish
The news is categorized bearish for crypto markets due to cross-asset risk-off dynamics. A sharp precious-metals unwind driven by dollar strength, rapid deleveraging and the end of a momentum trade increases risk aversion and liquidity stress across markets. Historically, large abrupt liquidations in one asset class (e.g., sovereign bonds, equities, or commodities) raise margin calls and force multi-asset selling that can depress risk assets, including cryptocurrencies, in the short term. Immediate impacts for traders: elevated volatility, possible short-term correlation between dollar and crypto (crypto may fall as dollar strengthens), tighter liquidity and wider spreads, and higher funding-rate swings on derivatives. Over the medium-to-long term the effect is neutral-to-moderately negative for crypto fundamentals: if the episode restores risk discipline and reduces speculative excess, it could curb frothy flows into crypto; conversely, prolonged monetary uncertainty or persistent dollar weakness later could revive safe-haven narratives and benefit both gold and certain crypto assets. Key indicators to monitor: USD index movements, options open interest and liquidations, crypto ETF flows, funding rates on derivatives, and Chinese retail activity patterns.