Silver prices experienced a sharp drop in late January 2026, primarily triggered by profit-booking after a parabolic rally and external macroeconomic pressures.

Key Triggers

This crash marked one of the worst single-day falls on record, with MCX silver futures plunging over 6% to Rs 2,74,410 per kg on February 1 amid a special Budget Day session. Spot silver tumbled 28% to around $83.45 an ounce, while related ETFs like ProShares Ultra Silver saw 60% losses. Analysts likened it to markets seizing an excuse to unwind extreme gains—silver had surged 326% over two years, hitting peaks above $120/oz earlier that week.

Profit-Booking Rush

Investors rushed to lock in gains after silver's meteoric rise from industrial demand (solar, EVs, AI) and safe-haven buying amid geopolitical tensions. Heavy liquidation of long positions by institutions accelerated the sell-off, compounded by margin hikes on exchanges like MCX. Technical indicators screamed "overbought"—RSI exceeded 80—prompting a classic correction.

Stronger US Dollar Impact

President Donald Trump's nomination of Kevin Warsh, an inflation hawk, as Fed Chair sparked a dollar rebound (DXY above 97), its biggest single-day gain since May 2025. Silver, priced in USD, became costlier for global buyers, slashing demand; higher rates further dimmed appeal for non-yielding metals.

Technical & Market Factors

Factor| Impact| Details 5
---|---|---
Overbought RSI| Extreme| Silver RSI hit 80+; gold also flagged.
Margin Hikes| Forced Selling| Traders liquidated as requirements rose.
Position Unwind| Cascade Effect| Speculative longs dumped amid falling prices.
Profit Realization| Volume Surge| Followed record highs (Rs 4,04,500/kg). 1

Forum Chatter

Silverbugs on Reddit buzzed with frustration over past drops, mirroring 2026 vibes: "Bloodbath bro" and debates on spot vs. futures, though recent threads predated this crash. Speculation swirled around supply deficits vs. hype, with some calling the market "broken" due to liquidity flows over fundamentals.

Outlook

Despite the plunge, bulls eye resilience from silver's dual industrial/investment role and ongoing deficits—JPMorgan even warned of a potential $50 rebound crash later in 2026, but demand drivers persist.

TL;DR: Silver crashed on profit-taking, dollar strength from Trump's Fed pick, and technical unwind after a 300%+ rally—classic correction, not collapse.

Information gathered from public forums or data available on the internet and portrayed here.