Silver’s 17% plunge reignites market behaviour that once topped bitcoin
Analysis
Price Impact
HighMichael burry's 'collateral death spiral' warning suggests that falling crypto collateral can force sales of other assets, like tokenized metals. this implies a significant feedback loop where weakness in crypto could trigger broader liquidations, including potentially more crypto sales to cover margin calls or rebalance portfolios.
Trustworthiness
HighThe warning comes from a respected investor (michael burry) and describes a plausible market mechanism involving leverage and forced liquidations, evidenced by the reported $16.82 million liquidation in xyz:silver on hyperliquid due to 'lopsided unwinds'.
Price Direction
BearishIf institutions are using crypto as collateral and its value falls, they might be forced to sell other assets (like tokenized metals) or even more crypto to meet margin calls. this creates a selling pressure feedback loop, pushing crypto prices downwards.
Time Effect
ShortForced liquidations and margin calls typically lead to rapid, short-term price movements as positions are unwound quickly in response to market conditions.
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Article Content:
Markets Share Share this article Copy link X icon X (Twitter) LinkedIn Facebook Email Silver’s 17% plunge reignites market behaviour that once topped bitcoin It is the same setup Michael Burry warned about this week, when he said falling crypto collateral can force metal selling in a feedback loop. By Shaurya Malwa Feb 5, 2026, 4:45 a.m. Make us preferred on Google What to know : Silver plunged as much as 17% in 24 hours, erasing a recent rebound and dragging gold and copper lower amid thin liquidity and heavy speculative positioning. Tokenized silver markets saw large forced liquidations, including about $16.82 million of long positions in XYZ:SILVER on Hyperliquid, underscoring how leverage is amplifying the sell-off. Hedge fund manager Michael Burry has warned of a "collateral death spiral" in which falling crypto collateral triggers selling in tokenized metals, with positioning and forced unwinds now outweighing macro drivers such as shifting Federal Reserve expectations. Silver sank as much as 17% in the past 24 hours, wiping out a two-day rebound as the metal struggled to find a floor after last week’s historic rout. The move dragged gold and copper lower as well, extending an unwind that traders say has been magnified by thin liquidity and heavy speculative positioning. STORY CONTINUES BELOW Don't miss another story. Subscribe to the Crypto Daybook Americas Newsletter today . See all newsletters Sign me up By signing up, you will receive emails about CoinDesk products and you agree to our terms & conditions and privacy policy . The renewed drop is also showing up on crypto rails. On Hyperliquid , one of the larger liquidation prints tied to tokenized silver was a forced close of roughly $17.75 million in XYZ:SILVER, with about $16.82 million of that coming from long positions, according to trade data shared by market participants. The lopsided unwind fits the pattern of late, with traders leaning into rebound bets only to get flushed when volatility spikes again. That spillover is exactly what hedge fund manager Michael Burry flagged earlier this week . Burry described a “collateral death spiral” dynamic, where leverage builds as metals rise, then falling crypto collateral forces traders to sell tokenized metals to meet margin. He singled out bitcoin losses could force institutions to liquidate profitable metals positions. In that kind of tape, the liquidation leaderboard can look inverted, with metals products briefly doing more damage than bitcoin itself. Macro headlines are not helping. Markets are still digesting the policy implications of Kevin Warsh’s nomination as Federal Reserve chair, while President Donald Trump has pushed back on the idea that the Fed could turn more hawkish. Rate expectations matter for precious metals, but the bigger driver right now is positioning and forced selling, not the clean macro bid that powered last month’s surge.