On December 29th, the global precious metals market experienced a shocking sell-off. Spot gold plummeted from $4,549 to $4,307, a decline of over 4%; silver dropped even more sharply from its high of $84, with a single-day volatility exceeding $13 and a nearly 10% decline. Platinum and palladium also followed suit, plunging over 13%. During this storm, the global market capitalization evaporated nearly $2 trillion in an instant.

Why did the market suddenly lose control? The main trigger was a sudden decision by the CME Group— they unexpectedly raised margin requirements, with gold increasing by 10% and silver directly raising by 13.6%. This was a heavy blow to high-leverage speculators. A large number of positions were forced to close, triggering a stampede of sell-offs, and the market fell into a self-reinforcing downward spiral.

What further heightened market anxiety was the rumor that a systemically important bank was taken over due to a $2.3 billion margin default. Although this was later unconfirmed, the very rumor was enough to ignite market panic.

On a deeper level, silver had indeed run too hot this year— soaring 185% year-to-date, far from its fundamentals. Quantitative funds and ETFs fueled the bubble, making it grow larger and larger. Now, it has finally burst. Meanwhile, signals of easing geopolitical tensions (Trump claimed there was 90% consensus in Russia-Ukraine negotiations) caused the safe-haven premium of gold to quickly fade. Coupled with tight liquidity at year-end, technical stop-loss orders were triggered in succession, creating a perfect storm of decline.

The aftershocks are still ongoing. U.S. stocks were dragged down as a result, and industrial metals plunged, reflecting extreme pessimism about demand. Some analysts even warned that silver could fall further to $42. Others believe that this extreme correction is merely a release of overheated sentiment, and the bull market is far from over.

For crypto investors, this storm is actually worth paying close attention to. It reveals the true flow of funds amid tightening global liquidity and the revaluation of safe-haven assets. When traditional safe-haven assets depreciate rapidly, Bitcoin’s status as an alternative non-sovereign asset will be re-examined. Meanwhile, privacy coins tend to gain attention during periods of rising uncertainty. Is this a sign that precious metals have peaked, or just the prelude to the next bottoming wave? The market is still waiting for the answer.