The crypto market’s close ties to traditional markets were laid bare Friday as a sharp drop in metals prices shook millions of leveraged bets on blockchain versions of gold, silver and copper.
Three-month copper futures on the London Metal Exchange (LME) fell nearly 4% from Thursday’s peak above $14,500 a tonne, settling closer to $13,000 due to technical disruptions at the LME and a sharp shift in positioning by Chinese traders. The move marks a pause after a relentless run driven by Chinese demand, energy transition optimism and a weak U.S. dollar.
Gold and silver prices fell 4% and 5.9%, respectively.
This decline quickly manifested itself in the crypto markets. Token metal products related to copper, gold and silver have seen generally high losses as their spot prices have cooled.
On exchanges, metals-related derivatives and spot products saw around $120 million in combined liquidations over the past 24 hours. Silver-related contracts led the pack with $32 million in losses, followed by gold and copper-related futures. Prices of tokenized investment products like XAU and XAUT fell by more than 7%.
These liquidations reflect how crypto platforms are increasingly being used as complementary rails for macro transactions.
When metals rose earlier this week, traders turned to crypto-native contracts for speed, leverage and around-the-clock access. As prices rolled, these same markets became a release valve for risk.
The broader pullback in metals came as the U.S. dollar strengthened on speculation that the Trump administration may be preparing to nominate Kevin Warsh as the next Federal Reserve chairman.
A stronger dollar tends to put pressure on greenback-denominated commodities, and Friday’s move hit metals across the board. Gold fell sharply from its record highs, while silver, crude oil and iron ore also fell.
However, despite this setback, metals remain one of the strongest themes of the year so far. Copper is still headed for a strong weekly gain, having recently rebounded on supply constraints and electrification demand, while gold continues to attract inflows as investors hedge against political and fiscal uncertainty.
Crypto markets are increasingly engaging in this journey – not as a separate transaction, but as a parallel venue where global macro bets are now playing out in real time.
