Bloomberg links the sharp correction in precious metals to the likely new head of the U.S. Federal Reserve. Remember, Trump decided to nominate Kevin Warsh for this position.

Gold showed the most severe daily move in decades, while silver had the biggest in history (even copper was affected, as part of the risk-off sentiment in metals). But before that, they had shown an enormous rise. So, the sharp correction is, to a large extent, a liquidation of long positions. And the trigger was indeed the rebound of the dollar after reports of Kevin Warsh's nomination for the head of the Federal Reserve. The market perceived this as a risk of a more aggressive monetary trajectory and, correspondingly, the 'anti-devaluation' narrative quickly saw long positions being liquidated.

Why did the drop happen like this? #Bloomberg has the answers to this:

- The market was overloaded with options: Goldman Sachs noted that the wave of call option purchases mechanically pushed prices up (through dealer hedging).

- At the reversal, the opposite side kicked in: the "gamma" effect/over-hedging intensified the sell-off, especially around large strikes in SPDR Gold Shares options.

The technical picture also screamed "caution!". Overheating indicators: RSI for gold was approaching extreme values (above 70 - overbought zone, and here it was significantly higher). This was a market that "needed a reason" for fixation.

The most interesting thing right now is what will happen next. Will this correction just be a long squeeze before the continuation of the rise? This question is not trivial - whether the inflow of liquidity into precious metals will continue now depends on the situation in the crypto market. So far, it can only be said that gold and silver have every chance of entering a stable downtrend according to our indicator on the 12-hour TF. For the first time since November. If such a signal is received, we will try to accumulate a short position on tokenized gold. Considering the impulsiveness of the decline - for now, a small portion of the amount allocated for the experiment.

So far, both assets, gold and silver, are still in an attempt to bounce back. So the crypto market should not celebrate too soon.

In the first half of January, there were already expectations that precious metals would stop rising and liquidity would begin to flow into the crypto market. We know how that ended. The crypto market now needs clear signals for the return of buyers, not just expectations that this return will happen.