Silver has recently reported a sharp 17% decline over the past 24 hours, erasing the two-day gains as the metal failed to stabilize after the previous week’s massive crash.
This decline also affected the prices of gold and copper and has instigated a slowdown process, which has been amplified by heavy speculative positioning and thin liquidity.
The renewed decline is also being witnessed among crypto rails. According to trade data shared by market participants, the Hyperliquid, one of the huge liquidation prints linked to tokenized silver, experienced a forced close of around $17.75 million in XYZ: SILVER, with $16.82 million coming from long positions.
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These events have crashed the contemporary market by following a frustrating pattern: the traders bet on recovery, but as the prices get shaky, they are forced to sell everything.
Hedge Fund Manager Michael Burry (famous for The Big Short) warned about this situation earlier this week and called it a “death spiral”. He explained that when prices go high, the traders buy more even if they have to borrow. However, when the Bitcoin prices crashed, these traders lost their collateral, and they had to sell their gold and copper to pay back their loans.
As a result of this, copper and gold are falling even harder than Bitcoin right now. Although the news about politics and the Federal Reserve’s decision about interest rates determines the changes in the prices of precious metals.
If the Fed is hawkish, the gold prices usually drop. However, the contemporary problem is not the economy, but rather the forced selling among traders to stay afloat, which is more important in defining the market dynamics.
