Crypto Journalist
Anas Hassan
Crypto Journalist
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Precious metals suffered a catastrophic collapse on January 30 as gold plunged over 12% below $5,000 an ounce while silver recorded its largest intraday drop in history, falling as much as 36%, according to Bloomberg.
The selloff was triggered by President Donald Trump’s nomination of Kevin Warsh as Federal Reserve chair, which sent the dollar soaring and sparked massive profit-taking across commodities markets.
The crash wiped out more than $15 trillion from the gold and silver markets in 24 hours, an amount equal to half the size of the entire U.S. economy.
Despite the brutal correction, both metals still finished January with gains (gold up 12% and silver up 16%), while Bitcoin tumbled to a nine-month low of $82,000, raising questions about whether the digital asset will follow precious metals’ trajectory or chart its own path.
Historic Selloff Driven by Warsh Nomination and Technical Factors
Spot gold prices crashed more than 12% at one point, hitting a low of $4,682 per ounce in its biggest single-day decline since the early 1980s, closing down 9.25% at $4,880.
Silver experienced an even more dramatic collapse, plummeting 36% intraday to $74.28 per ounce before settling 26.42% lower at $85.259, marking its worst day since March 1980.
“Trump announcing Warsh as his pick for next Fed Chair has been a US dollar positive and precious metals negative,” Aakash Doshi, global head of gold and metals strategy at State Street Investment Management, told Bloomberg.
“This has probably been exacerbated by month-end rebalancing as both short dollar and long precious metals has been the consensus macro trade over the past two to three weeks.“
The selloff accelerated through forced selling and margin calls as leveraged positions unwound.
“This is getting crazy,” said Matt Maley, equity strategist at Miller Tabak, adding, “Most of this is probably ‘forced selling.’ This has been the hottest asset for day traders and other short-term traders recently. So, there has been some leverage built up in silver. With the huge decline today, the margin calls went out.“
Bloomberg also noted that technical factors amplified the crash as a gamma squeeze forced dealers to sell futures contracts as prices fell through key options levels at $5,300, $5,200, and $5,100 for gold.
Gold’s relative-strength index had recently hit 90, the highest in decades, signaling that the precious metal was severely overbought and due for a correction.
Major mining companies suffered devastating losses, with Newmont down 11.52%, Barrick Gold falling 12.09%, and AngloGold plunging 13.28%.
Copper also retreated 3.4% from Thursday’s record high above $14,000 per ton, while silver ETFs saw their worst days on record, with the iShares Silver Trust losing 31%.
Bitcoin Faces ‘Two-Path’ Dilemma as Markets Reassess Fed Policy
Bitcoin dropped to $82,000 following Warsh’s nomination, with spot Bitcoin ETF outflows accelerating to roughly $1 billion this month and total liquidations approaching $800 million to $1 billion, according to Bitfinex analysts.
The digital asset is now trading at a nine-month low as investors reassess monetary policy trajectories.
Jeff Park, CIO at Bitwise, outlined a critical framework for understanding Bitcoin’s divergent path from precious metals in his “Two Bitcoin Thesis.”
“Metals are telling you spot debasement is happening; Bitcoin will tell you when the yield curve itself breaks,” Park explained, distinguishing between “negative rho Bitcoin” that performs better when rates fall and “positive rho Bitcoin” that thrives when financial system assumptions collapse.
Park argued the current environment represents the worst scenario for Bitcoin’s “negative rho” thesis.
“We’re currently experiencing good deflation in technology sectors while avoiding bad deflation in credit markets,” he wrote.
“This is the worst possible environment for Bitcoin: productive enough to keep growth assets attractive, stable enough to keep Treasuries credible, but not catastrophic enough to break the system.“
Speaking with Cryptonews, Aurélie Barthere, Principal Research Analyst at Nansen, identified multiple negative catalysts driving Bitcoin lower: “Fed Chair Powell guiding for no Fed cut in its remaining mandate till June 2026, President Trump seemingly choosing the more hawkish candidate as the new Fed Chair, Kevin Warsh, and a BTC correlation with US equities turning positive again.“
Flow data shows “slow capitulation in ETFs, options, and miner activity,” she noted.
Eric Jackson, incoming CEO of EMJX-SRX Health, offered a contrarian view on Warsh’s nomination.
“The nomination of Kevin Warsh for Federal Reserve Chairman appears constructively neutral-to-positive for crypto over the medium term, even if the initial market reaction is cautious,” Jackson told Cryptonews.
“His emphasis on balance sheet discipline and clearer boundaries between Treasury and the Fed points to less reflexive quantitative easing and greater transparency around liquidity conditions.“
Park’s analysis suggests the Warsh appointment could ultimately prove bullish for Bitcoin’s “positive rho” scenario by accelerating a systemic reckoning.
“If you believe the debt trajectory is unsustainable, if you believe fiscal dominance will eventually override monetary orthodoxy, if you believe the risk-free rate will eventually be revealed as a fiction, then you want Warsh,” he wrote.
He concluded that while he cannot confirm if “$82k was indeed the bottom,” historically, “bottoms are almost always noted by a radical shift in market regime that fundamentally resets investor behavior.“
