The cryptocurrency market’s close ties to traditional markets were laid bare on Friday when a sharp drop in metals prices shook millions into leveraged bets on blockchain versions of gold, silver and copper.
Three-month copper futures on the London Metal Exchange (LME) fell almost 4% from Thursday’s peak above $14,500 a tonne, settling near $13,000 amid technical disruptions on the LME and a sharp shift in positioning by Chinese traders. The move marked a pause after a relentless run driven by Chinese demand, optimism about the energy transition and a weaker US dollar.
Gold and silver prices fell 4% and 5.9%, respectively.
That reduction quickly manifested itself in the cryptocurrency markets. Tokenized metal products tied to copper, gold and silver saw a generally high rise in losses as their spot prices cooled.
Across exchanges, metal-linked derivatives and spot products saw approximately $120 million in combined liquidations over the past 24 hours. Silver-linked contracts led the pack with losses of $32 million, followed by gold and copper futures. Prices of tokenized bullion products such as XAU and XAUT fell by more than 7%.
These sell-offs reflect how crypto venues are increasingly being used as complementary avenues for macro trading.
As metals rose earlier this week, traders gravitated toward crypto-native contracts for speed, leverage, and round-the-clock access. As prices fell, those same markets became an escape valve for risk.
The strength of the dollar hurts
The broader metals pullback came as the U.S. dollar strengthened on speculation that the Trump administration may be preparing to nominate Kevin Warsh as the next chairman of the Federal Reserve.
A firmer dollar tends to pressure dollar-priced commodities, and Friday’s move affected metals across the board. Gold fell sharply from record levels, while silver, crude oil and iron ore also fell.
However, even with the setback, metals remain one of the strongest themes of the year so far. Copper is still on track for a strong weekly gain, having recently rallied due to electrification supply and demand constraints, while gold continues to attract inflows as investors shelter from political and fiscal uncertainty.
Crypto markets are increasingly willing to go that route, not as a separate trade, but as a parallel place where global macro bets now play out in real time.
