Silver Price Plunge and ETF Liquidation Amid US Policy Shift and USD Surge — Implications for Precious Metals Sector
Silver Price Crash and ETF Liquidation Driven by US Policy Shift and USD Surge
Over the past 48 hours, silver prices experienced a significant decline amid a sharp US Dollar Index rally and policy-driven market adjustments, highlighting the impact of recent Fed Chair nomination on precious metals and ETF flows. Key market movements include record drops in silver spot prices and ETF holdings, reflecting liquidity shifts and investor sentiment changes.
The spot silver price fell from $121 to $84 on January 30, a 37% decline, driven by the Fed's hawkish shift following Kevin Warsh's nomination and a surge in the US Dollar Index. The iShares Silver Trust ETF (SLV) recorded a 29% drop, marking its worst day on record, with notable ETF outflows and liquidation. The ProShares Ultra Silver ETF declined by 60%, with leveraged positions hit hardest by margin calls after technical breaks below key moving averages.
CFTC data released on January 30 indicated that speculators reduced their silver net-long positions by 36% to 7,294 contracts, the lowest in 23 months, coinciding with the price breakdown. Silver's RSI exceeded 80, signaling overbought conditions prior to the technical decline, and technical analysis showed breaks below moving averages, prompting profit-taking amid the policy shift.
These signals collectively demonstrate that a policy and regulation-driven shift—specifically the US Fed's hawkish stance and USD appreciation—has directly influenced liquidity conditions in the silver market, resulting in sharp price and ETF liquidation.
Such market dynamics suggest increased capital flows into US financial institutions and bondholders benefiting from higher yields, while speculative traders and hedge funds profit from the rapid unwind of leveraged silver positions. The USD strength also benefits US exporters, reinforcing the macro implications of policy-driven asset reallocation and liquidity shifts within the precious metals sector.
The dataset does not specify the exact margin levels or the total liquidity available in silver ETFs during the liquidation. It also lacks forward guidance beyond the observed market movements on January 30, 2026.
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