On January 30, 2026, the precious metals market experienced a textbook-level intraday volatility: gold saw a pullback of about 6.5%-9% within a few hours, briefly falling below the $5000 mark, before quickly recovering above $5100; silver exhibited even more extreme plunges and rebounds, with a daily drop of about 14%-17%, briefly dipping below $100 before rapidly bouncing back over $5. With the macro narrative not suddenly reversing, the leverage liquidation of on-chain derivatives was pushed into the spotlight, where Hyperliquid's silver contract saw a liquidation of $70.52 million, with 99% being long positions, becoming a key factor amplifying the volatility. The market thus posed a sharp question: is this the prelude to the end of a bull market, or a concentrated squeeze and reshuffling of chips targeting high-leverage longs?
Intraday Plunge and Instant Rebound: The Roller Coaster of Precious Metal Prices
● Gold Rhythm: During the trading session on January 30, gold prices plummeted from a high, with the maximum intraday drop fluctuating in the range of about 6.5%-9%, briefly breaking through the psychological and technical barrier of $5000. Subsequently, supported by buying interest and some short covering, the price quickly rebounded and re-established itself above $5100, leaving a significant intraday lower shadow. This extreme pattern often indicates a concentrated release of passive stop-loss and panic selling, followed by rapid absorption of funds at lower levels.
● Silver Comparison: The movement of silver that day was even more "meat grinder" in nature, with an intraday drop of about 14%-17%, far exceeding that of gold. During the sharp decline, the price briefly fell below the $100 mark, triggering a large amount of programmatic selling and leveraged long liquidations; however, after the downward momentum exhausted, silver quickly rebounded over $5 from its lows, completing a rapid emotional turnaround from panic selling to a sharp rebound. Compared to gold, silver has a higher beta and more concentrated leveraged funds, thus exhibiting a more exaggerated price path under the same macro backdrop.
● Sentiment and Trading: From the intraday rhythm, initially, long leverage and chasing funds were passively cut during the rapid decline, leading to a one-sided "sell-off" in liquidity, amplifying the short-term drop. Subsequently, as some technical-triggered liquidations approached their end, off-market observing funds and medium to long-term allocation funds began to enter the market in batches to buy the dip, shifting the trading volume from a single directional outflow to a multi-directional hedge. In this process, the price alternated between secondary bottom testing and rebounds, reflecting the interplay between passive liquidation and active positioning at different time windows.
● Data Ambiguity and Caution: It is important to emphasize that the lowest point of gold has circulated multiple versions in the market, and the precise high and low points of silver also have discrepancies within the $94-$96 range, and we still need to wait for final confirmation from official channels like CME. Therefore, only a rough description of the extreme price levels and declines during the day is retained, avoiding treating unverified precise values as established facts, which is a cautious attitude towards readers and the market.
On-Chain Liquidation Wave: The $70.52 Million Long Liquidation Bell
● Hyperliquid Scenario: The on-chain derivatives platform Hyperliquid became the focus during this round of volatility, with its SILVER contract experiencing a liquidation scale of about $70.52 million that day, with approximately 99% being long positions passively liquidated. This means that during the sharp price drop, almost all high-leverage bullish funds were ruthlessly swept out, and the liquidation engine concentrated on selling positions in a very short time, directly impacting the contract price downward, providing a "catalyst" and amplifier for the synchronized decline in the spot and other derivatives markets.
● Leverage Transmission Mechanism: In the actual trading chain, once high-leverage longs hit the maintenance margin standard, they will be forcibly liquidated by the platform, converting into continuous sell orders at market price. This chain liquidation is not limited to a single platform or single variety but transmits through market makers, hedging positions, and the rebalancing of related asset baskets to the spot market, other exchange contracts, and even cross-asset arbitrage structures. The result is that price corrections that could have been completed over a longer time frame are compressed into a short-term "risk liquidation storm."
● Leverage Squeeze vs Trend Reversal: Some analysts emphasize that "this adjustment is more like a leverage squeeze rather than a trend reversal," focusing on distinguishing technical liquidation from fundamental reversal. Technical liquidation is mainly triggered by margin rules and is not directly linked to macro interest rates, inflation expectations, or industrial supply and demand; its focus is on squeezing out overly crowded leveraged positions. In contrast, a trend reversal implies a fundamental disruption of the macro logic supporting long-term prices. From the current information, the expectations for interest rate cuts, geopolitical uncertainties, and physical demand behind gold and silver have not suddenly changed on this day.
● Cautious Approach to Unverified Details: Although various stories of "whales being buried" circulate in the market, some liquidation data and specific on-chain addresses are still in the verification stage, and related on-chain annotations have not received authoritative confirmation. Overemphasizing unverified large liquidations and specific address details can mislead readers and amplify emotional volatility. Therefore, when narrating this liquidation wave, it is more appropriate to focus on the confirmed scale and structural characteristics rather than treating unverified rumors as factual evidence.
Miners' Hedging Frenzy: The Misalignment Behind 4.3 Billion Ounces of Trading Volume
● Extreme Trading Volume: In the week before the crash, the COMEX silver market recorded a weekly trading volume of about 4.3 billion ounces, equivalent to about 5.2 years of global silver production. This data alone is enough to shock the market: such a massive nominal trading scale concentrated in a short time can easily be interpreted as "unprecedented strong consensus among silver bulls," attracting follow-up funds to increase positions at high levels. However, the source and structure of the trading volume are often more worthy of inquiry than the absolute numbers.
● Brandt's Hedging Perspective: Veteran trader Peter Brandt provided a completely different breakdown—he believes that a significant portion of the COMEX silver trading volume mainly reflects miners' hedging needs rather than pure speculative long positions or "real buying." Miners sell futures or forward contracts to lock in prices for future production to hedge against price decline risks; this behavior manifests as massive selling on the order book, but its motivation is risk management rather than directional shorting. This misalignment of hedging and speculation lays the groundwork for subsequent emotional mismatches.
● Accumulation of Trading Illusions: In recent weeks, many investors have simply viewed the increased volume on COMEX as a signal of "funds flooding in," overlooking that a large portion consists of miners and institutions' hedging positions. Under this misinterpretation, leveraged funds rushed to increase long positions at high levels, layering leverage around the narrative of "silver shortage" and "historic bull market starting point." As miners continued to systematically sell hedges while speculative funds interpreted these trades as "strong buying," the market quietly formed structural mismatches beneath the surface price.
● Echoes of Silver Thursday: The historical "Silver Thursday" in 1980 is an extreme case of trading and leverage misalignment: when a large number of leveraged longs were forced to liquidate during a price decline, silver instantly transformed from a star asset into a meat grinder, leaving behind a trail of leveraged fragments. This event cannot be simply compared in terms of scale or institutional background, but the transmission logic is similar—when trading volume is misread and leverage continues to accumulate, any trigger point can drag the former star into the depths of liquidation, putting those funds that rushed into the market at the emotional peak at the forefront.
Central Bank Buying vs Speculative Leverage: The Misalignment of Long Cycles and Short Rhythms
● Medium to Long-Term Bullish Logic: From a longer time dimension, the bullish logic for gold did not fundamentally change on January 30. Globally, expectations for interest rate cuts are still fermenting, and the direction of marginal monetary easing has not reversed; geopolitical risks and the trend of geopolitical fragmentation continue to provide a sustained premium for safe-haven assets; central banks around the world have been continuously increasing their gold reserves in recent years, forming structural buying on the physical level. These factors collectively support the medium to long-term bull market narrative for gold and indirectly for silver.
● Slow Variables vs Fast Money: The buying represented by central banks and long-term asset allocations is a typical "slow variable"—the pace of building positions is relatively smooth, with a high tolerance for short-term volatility, and the goal is more about long-term value preservation and risk diversification. In contrast, on-chain derivatives, leveraged ETFs, and high-frequency trading funds represent "fast money," chasing short-term volatility and directional explosions. The rhythms of the two are naturally misaligned: when the direction of slow variables remains bullish while fast money is overly crowded in the same direction in the short term, the market will structurally accumulate potential weaknesses.
● Squeeze and Reshuffle Mechanism: Under the premise that the macro bullish narrative has not been broken, prices can still experience extreme pullbacks, and the key lies in the leverage "squeeze." When leveraged funds chasing high prices concentrate, and futures and contract positions become overly crowded, any negative catalyst—even if it is just profit-taking, tightening liquidity, or increased hedging—can trigger chain liquidations, causing prices to deviate significantly from fundamental equilibrium in a short time. The recent plunge in gold and silver resembles a concentrated squeeze of these "watered-down positions" at high levels.
● Position Restructuring Rather Than Narrative Collapse: In terms of results, the plunge on January 30 did not accompany news of central bank sell-offs, a drastic reversal in global interest rate paths, or a sudden drop in physical demand. Instead, it resembles a position restructuring centered on leverage liquidation—impatient fast money was swept out, and some positions shifted from high-leverage short-term speculators to medium to long-term funds with more stable risk preferences. Rather than viewing it as the end of a bull market, it is better understood as an "internal check-up" of the bull market structure.
Warnings and Coincidences: Brandt, Aster, and Emotional Reversal
● Echoes of Warnings: Before the plunge, Peter Brandt had repeatedly issued warnings about the overheating of silver and the structure of COMEX trading, emphasizing the need to distinguish between miners' hedging and real investment buying. The market's movement dramatically echoed these views in timing: the structural mismatch in trading accumulated over the long term was ultimately revealed in a one-time price flash crash and liquidation event on January 30, making previously overlooked risk warnings suddenly appear "prophetic."
● Aster's Airdrop Timing Coincidence: Meanwhile, the on-chain project Aster plans to launch an airdrop on February 2, providing another battleground choice for crypto and derivatives funds. Although the airdrop itself has no direct causal link to the precious metals price drop, the proximity in timing objectively intensified the rebalancing pressure on some funds: a portion of speculative capital needed to balance margin and liquidity across multiple fronts, increasing the likelihood of passive contraction of high-leverage positions during severe volatility, making the emotional landscape more fragile.
● Narrative's Sharp Turn: In the community and public opinion arena, this round of adjustment has shown a typical narrative reversal rhythm: the earlier consensus around "silver will repeat the historical bull market" and "gold only goes up" dominated, with leverage and emotions continuously reinforcing each other; however, after January 30, the topic quickly switched to "liquidation panic" and "whale liquidations," with panic screenshots and liquidation bills flooding social media. The speed of emotional transition from greed to fear far outpaced any changes in fundamental data.
● Caution Against Single-Cause Attribution: It is important to be cautious about attributing this event entirely to a specific airdrop project, a particular prophet, or even a single tweet, as this is an oversimplification. Market volatility is often the result of a complex interplay of miners' hedging, derivatives leverage, changes in macro expectations, rebalancing rhythms, and community emotions. Only by understanding this game from structural and behavioral perspectives can investors avoid being led by simplistic narratives in the next wave of volatility.
After the Bloodbath: Is the Precious Metals Bull Market Still On or Has It Already Faded?
The more reasonable judgment currently is that the plunge on January 30 resembles a concentrated squeeze and reshuffling of chips targeting high-leverage longs, rather than a signal of the end of the medium to long-term bull market narrative for gold and silver. The core macro logic supporting precious metals—including expectations for interest rate cuts, geopolitical risk premiums, and continuous accumulation by central banks—was not overturned on that day, but rather obscured by short-term leverage noise.
From a structural perspective, this severe volatility is the result of multiple intertwined forces: the massive selling by miners on COMEX, primarily driven by hedging, formed the backdrop for increased trading volume; the concentrated liquidation of high-leverage longs in both on-chain and on-exchange derivatives markets provided acceleration for the price decline; at the same time, the long-term bullish backdrop of macro expectations and central bank demand did not change immediately, allowing new buying to take place at lower price levels after the liquidation was completed. These forces collectively drove a rebalancing process from the peak of emotions to a reassessment of risks.
For investors, the key is to learn to distinguish between "real demand" and "leverage noise": the former comes from central banks, physical consumption, and long-term allocations, representing a slow and resilient trend; the latter arises from high leverage, short-term trading, and emotion-driven sources, resulting in violent and fragile volatility. In future potential similar severe fluctuations, reasonably controlling leverage ratios, reserving sufficient margin, and maintaining a calm judgment of macro logic during extreme emotions will be far more important than simply chasing price directions.
Looking ahead, several key observation points are worth continuous tracking: first, whether there is a substantial change in the rhythm of central bank buying and long-term allocation funds; second, whether the overall leverage level and position structure in the derivatives market experience sustained deleveraging or quickly return to a high-risk state; third, whether there will be signs of severe misalignment in trading structure and leverage concentration similar to "Silver Thursday." The answers will determine whether this "bloodbath" is merely a necessary reshuffling during the bull market or a prelude to deeper structural risks.
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