Last week was one of the most dramatic weeks in global financial markets in recent years. Friday witnessed a historic collapse in gold, silver, and the crypto market that will remain etched in traders’ memories. Gold experienced its largest daily drop since the 2008 financial crisis, while silver recorded a historic crash with a decline of more than 25%.
These sharp declines followed an intense price rally that had pushed gold to an all-time high above $5,000. But as financial market history has shown, very rapid and intense gains are usually accompanied by equally severe corrections.
Fundamental Reasons Behind the Market Crash
The most important fundamental factor behind these crashes was speculation about Kevin Warsh being chosen to replace Jerome Powell as Federal Reserve Chair. This news had a profound impact on all markets as investors realized that the “dollar debasement” narrative—the main engine driving gold and crypto gains—might be coming to an end.
Warsh has always been a hawk in the past and voted against interest rate cuts and quantitative easing policies in 2011. Although he has supported lower rates in recent interviews, analysts believe these positions were merely to curry favor with Trump and secure his desired position.
Most importantly, Warsh has consistently maintained his opposition to quantitative easing. Therefore, analysts believe that Warsh will maintain a hawkish view when he moves to the Federal Reserve, just as Jerome Powell did.
US Dollar Strength Returns
After weeks of weakness, the US Dollar experienced a powerful comeback on Friday. The DXY index, which measures the dollar’s value against a basket of major currencies, saw significant gains. This dollar strengthening means reduced attractiveness for assets like gold, silver, and crypto that are typically traded against the dollar.
US Treasury yields also increased, indicating a shift in market expectations regarding Federal Reserve monetary policy. Investors now have lower expectations for rate cuts, which favors the dollar and works against risk assets.
Geopolitical Tensions with Iran
Another factor affecting markets is rising geopolitical tensions between the United States and Iran. Trump has threatened to attack Iran, which could have widespread impacts on energy markets and consequently the entire global economy.
Interestingly, Brent crude has risen above $70 for the first time since September, but Bitcoin has been unable to benefit from these tensions as a safe-haven asset. This calls into question the narrative of “Bitcoin as digital gold.”
Detailed Look at the Crypto Market Crash
One of the factors intensifying the crypto market crash was widespread liquidations. According to CoinGlass data, over $2.5 billion in positions were liquidated in 24 hours, representing a 348% increase from the previous day.
Ethereum liquidations exceeded $1.1 billion, Bitcoin surpassed $785 million, Solana reached over $197 million, and XRP positions worth $61 million were liquidated. These liquidations brought back memories of October 10, when the crypto market experienced its largest liquidation in history with over $20 billion wiped out.
Declining Open Interest
Futures open interest also dropped 10% in 24 hours to $113 billion. This decline indicates capital leaving the market and reduced risk appetite among traders.
Chinese Investors and Crypto Traders
Reports indicate that Chinese retail buyers and crypto traders played a significant role in recent volatility in silver and the crypto market. The combination of trend-chasing behavior and rapidly shifting speculative capital has amplified price movements.
The correlation between silver and US tech stocks during the initial crash leg is further evidence that recent price action has been speculative in nature, echoing behavior seen in crypto during previous momentum phases.
Bitcoin Technical Analysis
Bitcoin fell below the key support level of $80,000 on Sunday, reaching $78,678—a sharp decline from its all-time high of $126,300.
Weekly Timeframe Analysis:
- Formation of a Rising Wedge pattern, which is typically bearish
- Development of a Bearish Flag pattern
- Price moving below the 50-week Exponential Moving Average (EMA)
- Break of the Supertrend indicator
These patterns typically lead to continued downward movement and increase the probability of further decline for Bitcoin and the entire crypto market.
Key Levels:
- Current Support: $78,000
- Next Support: $75,000, then $70,000
- First Resistance: $80,000 (important psychological level)
- Major Resistance: $85,000
The short-term outlook for Bitcoin is bearish, and prices will need significant time to digest these moves before signs of a bottom potentially emerge again.
Gold Technical Analysis
Gold experienced one of its biggest percentage falls in years. By just after the London close on Friday, gold was still around 8-9% lower on the day, holding below the key $5,000 level. This was gold’s largest intraday drop since the global financial crisis of 2008.
Technical Status: Gold’s break of the psychological $5,000 level puts it on a bearish path in the short-term. Prices will need a lot of time now to digest these moves before we potentially see signs of a bottom emerge again.
Key Levels:
- First Support: $4,679 (Friday’s low) – trapped traders’ stops are likely resting just below this level
- Important Support: $4,600 (previous gap)
- Psychological Support: $4,500
- First Resistance: $4,941
- Psychological Resistance: $5,000
- Major Resistance: $5,100
The path of least resistance is currently to the downside, and the onus is on the bulls to show they are still in control despite Friday’s big setback.
Silver Technical Analysis
Silver had an even worse situation than gold, plunging more than 25% at one point, making it a record intraday slump. Silver fell more than $10 in the past 24 hours.
Weekly Timeframe Analysis: Silver remains incredibly stretched and vulnerable to a mean-reversion episode.
- RSI(14): At 88.92, indicating severe overbought conditions
- MACD: At 14.844, levels not seen going back decades
- Upper Bollinger Band: $101.77
- Bollinger Mean: $63.20
- Uptrend from November: In the low $80 region
Price remains miles above the upper Bollinger Band and even the mean. The weekly candle forming resembles a potential Shooting Star, which is a bearish reversal pattern.
Given that sharp boom-bust episodes are common in Chinese retail-dominated markets (such as equities and commodity futures), this pullback could morph into something much more significant.
EUR/USD Technical Analysis
The Euro put in a significant breakout earlier in the week and tested above a couple of key areas, including both a trendline and the 1.2000 psychological level. As we saw the pullback in the USD trend in the back-half of the week, EUR/USD also retreated.
Current Situation: While Trump has been clear in his push for a weaker US Dollar, few economies are likely welcoming significant currency strength as it creates pressure on exports.
With EUR/USD gaining massively last year, this puts the ECB in a precarious spot. If the Euro appreciated even more against the Dollar, it could quickly lead to ramifications via slower inflation, lower growth, and eventually the need to cut rates.
Key Levels:
- Current Support: Long-term trendline projection
- Important Support: 1.1800 (late-2025 resistance)
- Fibonacci Supports: 1.1686 and 1.1748
- First Resistance: 1.1909
- Psychological Resistance: 1.2000
The test for next week as we go into the ECB meeting is to see whether buyers jump in to support the pullback.
GBP/USD Technical Analysis
Cable is still the preference for USD-weakness scenarios. As we approach the weekend, the pair is at a key support zone from 1.3643-1.3683.
Key Levels:
- Current Support: 1.3643-1.3683
- Next Support (s2): 1.3544-1.3568
- Invalidation Levels: 1.3460 and 1.3500
- Resistances: At higher levels
If we see the pair push below either 1.3460 or 1.3500, then we’ll likely be seeing some pretty extreme USD-strength, which could derive from something like a very strong NFP report or similar events.
USD/JPY Technical Analysis
The USD/JPY story last week was very interesting. The beginning of the week saw a fast and violent carry trade unwind that caused a sharp drop in this pair. Fears of intervention and narrowing rate differentials were enough to cause bulls to jump ship.
Important Notes:
- Test of the 154.45-155.00 zone where sellers attacked
- Movement to near the massive spot of importance at 151.95
- Trump’s remarks on Tuesday calling USD weakness “great”
- Treasury Secretary Scott Bessent’s confirmation on Wednesday that the US did not intervene in the Yen
This confirmation caused the pair to rally ahead of the FOMC meeting and seems to be the push point that’s allowed both markets to recover from oversold conditions.
Current Status: USD/JPY is right back to the 154.45-155.00 zone that held the highs earlier in the week. If buyers can force a break above the psychological 155 level overhead, the door opens for a larger rally as the rate differential remains tilted to the long side of the US Dollar.
Key Events This Week
NFP Report (Friday)
The most important event this week is the US Non-Farm Payrolls (NFP) report on Friday. This report could have a major impact on all markets:
- If NFP is strong: Dollar strengthens, gold and crypto face more pressure
- If NFP is weak: Calls for further rate cuts in Q2 should grow louder and might trigger another golden wave
Other Labor Market Indicators
In addition to NFP, other labor market indicators will be released throughout the week, not least JOLTS Job Openings on Tuesday, which should be watched closely.
Central Bank Meetings
Three important central bank meetings are ahead:
- European Central Bank (ECB): Likely to try to talk the Euro down
- Bank of England (BOE): Reviewing monetary policy
- Reserve Bank of Australia (RBA): Announcing its decisions
Iran Geopolitical Risk
There is still the risk of Iran being bombarded by the US, which adds another layer of complexity. The potential for a price gap is there at the Asian open on Monday.
Summary and Outlook
Last week was a turning point in global financial markets. Narratives that had been driving gains in gold, silver, and crypto for months—including dollar debasement, concerns about Fed independence, and geopolitical tensions—were quickly called into question.
Warsh’s probable appointment showed how dependent the market was on specific narratives, and when those narratives changed, the reaction was swift and violent.
Key Points for Traders:
- High Volatility Continues: Some traders will undoubtedly be looking to buy the dip, while others might be looking to exit on any short-term rallies.
- Bearish Short-term Outlook: For gold, silver, and crypto, the path of least resistance is currently to the downside.
- Risk Management is Essential: Usually, after such big drops, you tend to see at least some downside follow-through.
- NFP Importance: Friday’s report could set the direction for markets in the coming weeks.
- Currency Stability Desired: Both the US and Europe are likely seeking to prevent extreme currency volatility.
Traders should be very vigilant this week and avoid high leverage. Markets are still digesting last week’s shock, and any new data or news could create fresh volatility. Keep positions nimble and watch the weekly close for guidance on the next major moves.
