Bitcoin and Silver Plunge Amid Market Panic
On February 5, 2026, Bitcoin’s value dropped below $70,000, marking a significant decline of 7-8% over a 24-hour period, reaching its lowest level since November 2025. This decline coincided with a broader sell-off in U.S. tech stocks, particularly those linked to artificial intelligence, as investor sentiment soured due to policy uncertainties. Ethereum and XRP also experienced sharp declines, with losses of approximately 7.4% and 14%, respectively.
Massive Crypto Market Losses
Over the past week, the global cryptocurrency market has lost nearly $500 billion in total value. Bitcoin’s value alone has decreased by approximately 20% within this timeframe, hovering near $70,122 as of the latest data. This market turbulence highlights the vulnerability of cryptocurrencies to external economic pressures and investor sentiment shifts.
Precious Metals Market Volatility
Simultaneously, the metals market has experienced significant turmoil. Silver ETFs plunged by up to 21%, and gold ETFs slid by 7%, driven by falling bullion prices amid upcoming U.S.–Iran diplomatic talks. Silver futures experienced an intraday drop of up to 13%, while gold fell below $5,000 per ounce, trading around $4,942.80.
These declines in precious metals have been attributed to margin requirement hikes and a stronger U.S. dollar, particularly affecting silver futures. The nomination of Kevin Warsh as Federal Reserve Chair, signaling potential tighter monetary policies, has also strengthened the dollar, contributing to the sell-offs in metals and, indirectly, in cryptocurrencies.
Forced Liquidations and Leverage Dynamics
The sharp drop in silver prices has triggered forced liquidations across both metals and cryptocurrency markets. Tokenized silver positions saw massive liquidations, with approximately $17.75 million forced closure on platforms like Hyperliquid, primarily affecting long bets. A broader crypto liquidation event resulted in $544 million in forced sales, with tokenized silver leading the losses.
Market analysts suggest that the Bitcoin plunge is less about fundamentals and more related to market mechanics, including heavy leverage and forced liquidations. The interconnectedness of leveraged trades across different asset classes has exacerbated the market stress, leading to cascading selling pressures.
Interconnected Market Stress
As the precious metals market collapsed, the crypto markets were caught in the crossfire. Traders holding positions in both metal-linked and crypto assets faced margin calls, which created a chain reaction of sell-offs across these sectors. The combination of heavily leveraged markets and interconnected trading platforms has amplified the impact of silver’s turmoil on the broader financial markets.
Hedge-fund investor Michael Burry warned that a continued decline in Bitcoin could necessitate further forced sales in gold and silver, potentially wiping out an additional $1 billion in market value. This highlights the correlation risks through tokenized positions and cross-asset leverage.
Conclusion: A Complex Market Scenario
In summary, while silver’s downturn is not the direct cause of Bitcoin’s crash, the collapse in silver prices has contributed to broader market stress, particularly in leveraged markets. The current situation reflects the structural vulnerabilities of interconnected risk markets, where macroeconomic shifts, leverage overhangs, and investor sentiment play crucial roles. Silver’s price drop has amplified panic in the markets, but Bitcoin’s correction is primarily rooted in its own dynamics, exacerbated by cross-asset stressors.
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