From the epic collapse of gold and silver to the precarious state of U.S. stocks, a cross-market liquidity crisis is brewing.
1. Black Friday: A "multi-kill" stampede across multiple asset classes
The first weekend of February 2025 saw a textbook-style "perfect storm" in global financial markets.
The precious metals market was the first to ignite the crisis. On January 30, international gold prices plummeted from nearly $5600/ounce, a historic high, dropping more than 10% in a single day, marking the largest single-day drop since the 1980s; silver crashed more than 26%, briefly falling below $80/ounce and setting a record for the largest single-day drop in history. As of February 2, spot gold had fallen below $4700/ounce, a decrease of nearly $1100 from its peak.
The cryptocurrency market follows closely behind. Bitcoin broke below the $75,000 psychological barrier over the weekend, hitting a new short-term low, echoing the previous loss of support at the active realization price of $87,000.
U.S. stock futures are also under pressure. On February 2, before the market opened, Nasdaq futures fell nearly 1%, and the S&P 500 index has retreated from its highs, with the VIX fear index soaring to 17.44, indicating a clear shift in market sentiment towards caution.
This is a rare synchronized sell-off across asset classes, driven by a series of macro risks that have exploded.
2. Triple Critical Strike: The Last Straw That Broke the Market
The first layer: Warsh's Nomination - The Policy Paradox of "Hawkish Rate Cuts"
On January 30, Trump officially nominated Kevin Warsh as the next chairman of the Federal Reserve.
Who is Warsh? He was a staunch opponent of quantitative easing during his tenure as a Federal Reserve governor from 2006 to 2011. He resigned in protest when the Federal Reserve initiated its second round of quantitative easing in 2011. He advocated for the Fed to undergo a "systemic transformation" and reduce its massive balance sheet, even if it meant implementing tightening policies.
But strangely, Warsh recently proposed a "limited rate cut + balance sheet reduction" compromise framework in his (Wall Street Journal) column - which has been interpreted by outsiders as "hawkish rate cuts": superficially accommodating Trump’s rate cut demands, but actually withdrawing liquidity through balance sheet reduction.
This policy combination has a fatal impact on the market. The plunge in gold and silver stems from this: the market originally expected the new chairman to execute a combination of "rate cuts + balance sheet expansion," but Warsh's nomination completely overturned this expectation.
The second layer: The Epstein Files - the "Black Swan" of political risk
What’s more unsettling for the market is the "Epstein Files" that have been simmering since last weekend. This batch of over 3 million pages of documents has implicated Warsh - his name appeared on the guest email list for the "St. Bart's Christmas Party" in 2010.
Although there is currently no evidence that Warsh is involved in illegal activities, his name being connected to this century's scandal constitutes a huge political liability. In an already controversial economic environment, this incident has made an already fragile nomination even more difficult.
Political uncertainty is transforming into market risk premiums.
The third layer: Tariff policy - the "Sword of Damocles" of the trade war
The Trump administration's tariff policy continues to escalate. According to an executive order signed on February 1, 2025, the U.S. has imposed a 10% tariff on Chinese goods citing the fentanyl issue and a 25% tariff on goods from Mexico and Canada (10% on energy products). On February 4, China quickly retaliated with a 15% tariff on coal and liquefied natural gas, and a 10% tariff on crude oil and agricultural machinery.
If the scope of the new round of tariffs expands, it will not only hit consumer confidence and corporate profits but may also further inflate the already large fiscal deficit. It is predicted that the U.S. fiscal deficit will reach $601 billion in just the first three months of 2026.
3. Liquidity Black Hole: The contagion chain from commodities to stocks
The core driving force of this storm is the liquidity contagion triggered by forced liquidation of high-leverage positions.
The "Death Spiral" of the commodity market
The plunge in gold and silver is not due to a deterioration in fundamentals, but a typical liquidity stampede:
1. Overheated Trading: Just one month into 2026, gold rose nearly 30%, while silver doubled, with the RSI indicator breaking 93 and open interest reaching historical highs.
2. Margin Increase: CME raised gold futures margin from 6% to 8% on February 2, and silver from 11% to 15%
3. Forced Liquidation: High-leverage longs were concentrated and liquidated in a short time, with the total amount of liquidation in tokenized futures reaching $140 million within 24 hours
4. Cross-Market Sell-off: Investors forced to sell other market assets to raise margin, triggering cross-market risk contagion
This "multi-kill" stampede is statistically classified as a "7-sigma" extreme event - akin to a rare occurrence that might happen only once in a geological era.
The technical crisis of U.S. stocks
From a technical analysis perspective, the Nasdaq index has been oscillating at high levels for three months, forming a rising wedge structure. Now, the critical rising trend line has been effectively breached for the second time, significantly undermining market confidence.
If tonight's daily closing price is below the previous low, forming a "lower low," then a larger downtrend may commence.
What’s more dangerous is that cracks in the AI narrative are starting to show. The recent weakness of the Nasdaq index, especially software stocks becoming the most oversold sector in the S&P 500, indicates that the market's fervor for AI is cooling. Investors are beginning to realize that the commercialization and profitability of AI will take much longer than anticipated.
----
4. The Ghost of 1979: Stagflation and Policy Dilemma
The current geopolitical and macroeconomic environment bears an astonishing resemblance to 1979.
That year, the Soviet Union invaded Afghanistan, the Iranian revolution triggered the second oil crisis, and the global economy sank into "stagflation." The Federal Reserve at the time failed to take decisive action in a timely manner under political pressure, resulting in uncontrolled inflation, which ultimately had to be contained by Paul Volcker's "shock therapy" of sharp interest rate hikes, but at the cost of a deep economic recession.
Today, we once again face a similar situation:
• Tensions in Middle Eastern Geopolitics: Polymarket data shows that the market believes the probability of the U.S. striking Iran before the end of this month has risen to 31%
• Energy Price Volatility: Crude oil prices fell 5.51% to $61.62 per barrel, but geopolitical risk premiums are still accumulating
• Inflation Stickiness: Core PPI in the U.S. for December 2025 exceeded expectations, indicating that inflation is becoming embedded in the overall economy
• Risk of Political Intervention: Potential interventions by the Trump administration in the Fed's independence evoke memories of past policy missteps
The yield on 10-year U.S. Treasury bonds has risen to 4.218%, while the U.S. government now needs to pay over $1 trillion in interest on its huge national debt every year. If history repeats itself, aggressive tightening policies taken to control inflation may end this bull market.
5. Shenzhen Shui Bei Explosion: The Storm Landed in China
This global liquidity crisis has already affected China.
Several gold shops in Shenzhen Shui Bei have exploded due to participating in unqualified gold futures gambling transactions, with the amount involved possibly reaching billions, affecting thousands of investors. These gold shops promised high fixed returns through a "client management" model, but were actually engaging in high-leverage offshore gold futures gambling.
When international gold prices plummet, these leveraged positions are forcibly liquidated, gold shops are unable to repay customers' principal, ultimately leading to explosions. This exposes:
1. Regulatory Arbitrage: Some institutions exploit regulatory differences between domestic and foreign markets for high-leverage speculation
2. Lack of Investor Education: Ordinary investors have insufficient awareness of futures leverage risks
3. Cross-Border Risk Contagion: International market fluctuations rapidly transmit to the domestic market through informal channels
----
6. Market Outlook: Finding Anchors in Uncertainty
Short-term (1-3 months): The market will enter a period of high volatility. Bitcoin may test the $70,000-$75,000 range, and if U.S. stocks form a "lower low," it may trigger a chain sell-off in programmatic trading. The VIX index may rise further.
Medium-term (3-6 months): The key lies in the actual implementation strength of Warsh's policies. If he indeed implements "hawkish rate cuts," global liquidity will face substantial tightening, and risk assets may undergo a round of valuation reconstruction. However, if the policy stance softens, the market may welcome a rebound window.
Long-term (over 6 months): Structural factors have not changed. Global central bank demand for gold, the trend of de-dollarization, and the deep monetary trust crisis with negative real interest rates in the U.S. - these core rationales supporting the long bull market in gold remain valid. The current plunge is more a release of speculative bubbles than the end of a bull market.
For asset allocators, this moment may be the time to reassess the strategy of **"gold as a risk control anchor"**. As you previously shared, the idea of a 30%-40% allocation to gold is now highlighting its risk hedging value in the current environment.
Conclusion: Thoughts in the Eye of the Storm
From the epic collapse of gold and silver to the flash crash of Bitcoin, and the shaky state of U.S. stocks, the market is experiencing a global deleveraging event.
When investors are forced to liquidate high-leverage positions in one market, they have to sell assets in other markets to raise margin, thus triggering cross-market risk contagion. If this liquidity drought continues, the next asset to be sold off may be U.S. stocks, which are currently overvalued.
Warsh's nomination and the exposure of the Epstein Files are just the last straw that broke the camel's back. The real question is: after the era of liquidity surplus ends, how will the market repricing risks?
The ghost of 1979 is wandering, but history will not simply repeat itself. For investors, staying calm in the storm and finding anchors amidst volatility may be the only way to navigate through the cycle.
How do you view this cross-market liquidity crisis? Is it a short-term adjustment or a precursor to systemic risk? Feel free to share your thoughts in the comments!
If you find this article helpful, please like, save, and share it to let more people see the truth of the market. Follow us to stay on track and get in-depth market analysis at the first opportunity!
Disclaimer: This article is for reference only and does not constitute investment advice. Financial markets are highly volatile, please make decisions cautiously based on your own risk tolerance.
#加密市场回调 #BTC何时反弹？ #爱泼斯坦案烧向币圈 #贵金属巨震 #美国PPI数据高于预期 $BTC
