Precious Metals Plunge Could Open Door for Bitcoin Rally

Crypto bulls who have long argued that bitcoin’s next move depends on money leaving overheated precious metals may soon get their answer.

The metals bubble appears to be bursting. Silver, which hit a record $120 per ounce earlier Friday, has tumbled 35% to $75 in U.S. afternoon trading. Gold, which briefly touched $5,600 on Thursday, has fallen 12% to $4,718. Silver’s rapid drop erased nearly all of its January gains within hours, a level of volatility reminiscent of the 1980 Hunt Brothers silver saga.

U.S. equities also weakened, with the Nasdaq down 1.25% and the S&P 500 off 0.9%. Cryptocurrencies, by contrast, have held above Thursday’s panic lows, with bitcoin trading around $83,000 after bottoming near $81,000 overnight.

Observers say President Trump’s nomination of Kevin Warsh as Federal Reserve chair may have triggered risk-asset selling, as Warsh is widely viewed as a hawkish pick.

Crypto Bulls Eye Opportunity

Paul Howard, director at trading firm Wincent, noted that recent commodity rallies drew capital away from crypto markets, a trend that could now reverse. “Cryptocurrency markets have been the victim of capital flowing into the still-popular commodities trade,” he said. February BTC 105,000 calls are among the most actively traded options, signaling growing interest in upside exposure.

Howard added, “The market may be overdue for a commodity-style catch-up.” On Warsh’s nomination, he observed, “What was meant to be a bullish signal coincided with a broader risk sell-off—a knee-jerk reaction as markets recalibrate.”