Precious Metals and Crypto Collapse: Gold Below $4,600, Silver Under $70, Bitcoin Under $70,000

The Everything Liquidation

What was once an "everything rally" has become an "everything liquidation" — with the notable exception of energy. Precious metals and cryptocurrencies, traditionally considered safe havens and inflation hedges, are being sold off alongside equities and bonds.

Current Levels

Gold Enters Correction Territory

Gold's decline from its highs has now exceeded 10%, officially entering technical correction territory. This is particularly notable because gold is typically the asset investors flee to during times of crisis — not the one they sell.

The gold drawdown reflects:

1. Margin calls — Investors liquidating profitable positions to cover equity losses
2. Dollar strength — USD above 100 makes gold more expensive for foreign buyers
3. Rate expectations — No cuts in 2026 means no lower opportunity cost for holding cash
4. Forced selling — Funds with mandate constraints must rebalance as equities drop

Bitcoin's Brutal Decline

Bitcoin has fallen below $70,000, representing a drawdown of more than 35% from its highs. This is now among the largest drawdowns in Bitcoin's post-2020 history.

The crypto sell-off is being amplified by:

• Leverage liquidations — Cascading liquidations of leveraged positions
• Risk-off sentiment — Crypto is treated as a risk asset, not a safe haven
• Reduced liquidity — Market makers pulling back in volatile conditions
• Regulatory uncertainty — Ongoing pressure from global regulators

The "Liquidity Event" Signal

When gold, Bitcoin, equities, and bonds all sell off simultaneously, it typically indicates a liquidity crisis rather than a fundamental shift in any single market. Investors are selling what they can, not what they want to.

This pattern was last seen during:

• March 2020 (COVID onset)
• 2008 (financial crisis)
• 1998 (LTCM crisis)

What's Driving It

1. Middle East Escalation

• Iran missile strikes on Gulf energy facilities
• Strait of Hormuz nearly closed
• Brent crude above $110
• LNG supply disruptions forcing Asian importers to coal

2. Fed Hawkish Pivot

• No rate cuts expected in 2026 (from 62 bps expected pre-conflict)
• Powell: "If we don't see progress, we won't cut"
• Rate hike possibility discussed

3. BOE Joins the Hawkish Camp

• UK central bank removed "rate cut" language
• UK 2-year gilt yields surged 27 bps in one session
• 90 bps total increase since the war began

What Could Reverse It

• De-escalation in the Middle East — the single biggest catalyst
• Fed pivot back to dovish stance — unlikely given inflation data
• Coordinated central bank intervention — possible if liquidation accelerates
• Bottom fishing — when valuations become compelling enough to attract buyers

The Big Picture

The current environment has all the hallmarks of a regime change in global markets. The post-2020 era of abundant liquidity, low rates, and risk-on everything is colliding with a reality of geopolitical instability, persistent inflation, and constrained central bank policy.

For investors, the lesson is clear: in a true liquidity event, correlations go to one. The traditional portfolio of 60% stocks / 40% bonds offers little diversification when both are falling. The only assets providing protection are cash, the U.S. dollar, and energy.

Source: Zhihu Discussion