Precious Metals Selloff May Pave the Way for Bitcoin Rally
Crypto bulls who have long argued that bitcoin’s next move depends on money leaving red-hot precious metals may soon get a test of that theory.
The metals bubble appears to be bursting. Silver, which hit a record $120 per ounce earlier Friday, has plunged to $75 in U.S. afternoon trading, down 35% for the day. Gold, which briefly touched $5,600 on Thursday, has retreated to $4,718, shedding 12%.
Silver’s rapid reversal wiped out nearly all of its January gains in a matter of hours. While crypto traders are accustomed to sharp swings, such extreme volatility in metals is reminiscent of the Hunt Brothers’ silver saga in 1980.
U.S. equities are also weaker, with the Nasdaq down 1.25% and the S&P 500 off 0.9%. Cryptocurrencies, by contrast, have held steady above Thursday’s panic lows. Bitcoin is trading around $83,000, recovering from an overnight low of $81,000.
Market observers cite President Trump’s nomination of Kevin Warsh as Federal Reserve chair as a potential trigger. Seen as a hawkish pick, Warsh’s selection may have sparked selling across risk assets.
Opportunity for Crypto
Paul Howard, director at trading firm Wincent, says recent parabolic moves in commodities drew risk capital away from crypto markets—a trend that may now be reversing. “Cryptocurrency markets have been the victim of capital flowing into the still-popular commodities trade,” he noted.
Howard added that crypto options interest is growing, 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.”
Commenting on Warsh’s nomination, he said, “What was meant to be a bullish signal coincided with a broader risk sell-off. The reaction may be more of a knee-jerk as markets recalibrate.”
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