Markets decline as Bitcoin and silver initiate a worldwide margin call following inflation alerts that hinder recovery prospects.

Bitcoin is descending toward a precarious $56,100 price floor as significant ETF outflows indicate a demand crisis

Every cycle reaches a pivotal moment, where the narrative shifts from charts to cash.

This shift is evident in traders’ conversations, where humor fades, group chats become filled with liquidation ladder screenshots, and the focus narrows to collateral—how much remains, the speed of movement, and what must be sold to sustain other positions.

This week marked that moment across two markets that rarely share headlines: Bitcoin and silver.

Since last week, Bitcoin has experienced a decline of approximately 24%, dropping from around $90,076 to a low of $66,700. Silver has seen an even steeper decline, falling roughly 34% in the same timeframe. Gold has decreased by over 6%. US equity futures are down about 2%. The dollar has risen by approximately 2% on the DXY index. Oil has increased by about 1.6%.

This combination is significant, as it reflects stress rather than rotation. When the dollar strengthens and major risk assets decline, the instinctive response is to reduce exposure, increase cash reserves, lower leverage, and prepare for the next headline.

And headlines have been quite impactful.

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Silver’s decline had a catalyst, as leverage became more costly

Silver behaved like a trapdoor.

The immediate trigger was mechanical. The Chicago Mercantile Exchange increased margin requirements for precious metals, requiring traders to deposit more cash to maintain their positions following a period of extreme volatility.

Silver futures plummeted sharply after this adjustment, with gold also declining, as the new regulations pressured leveraged traders who had capitalized on the rally.

The specifics reveal why the impact was so severe. CME Clearing raised COMEX silver’s margin in late December, first increasing the initial requirement from $20,000 to $25,000, then raising it again to $32,500 just days later.

Subsequently, the squeeze intensified: by late January, CME transitioned to steeper percentage-based settings, and in early February, it raised the rate again (from 11% to 15%), compelling traders to post significantly more collateral per contract. The cash required now scales higher as prices increase, creating a compounding squeeze that forces leveraged long positions to quickly reduce risk when the market shifts.

For those utilizing high leverage, this effectively results in a sudden reduction in position size, leading to a rapid and chaotic unwind when prices fluctuate.

Margin increases necessitate a decision: add cash, reduce position size, or close the position. When enough participants receive the same message simultaneously, selling becomes the only response the market comprehends.

Silver did not decline because the demand for it vanished. It fell because the price had turned into a leveraged wager, and the cost of that wager just increased.

This week feels more significant than a typical crypto downturn. The stress is evident in areas that are typically considered stable.

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Bitcoin is descending through price levels, one step at a time

Bitcoin’s decline has been abrupt, yet it has followed a structured pattern.

The chart since January 28 resembles a staircase descending, with brief pauses followed by further drops. Initially, Bitcoin slipped below the high $80,000s, then fell below the low $80,000s, subsequently breaking into the $70,000s, and now it is struggling to maintain the high $60,000s.

The critical levels in my two-year channel map have been functioning effectively, which poses a challenge for bullish traders.

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On the 30-minute chart below:

• The first significant break occurred when Bitcoin fell below the $83,500 level.
• The next breakdown was at the $77,000 mark, where the market attempted to stabilize but ultimately failed.
• The pivotal moment came at $73,600, the 2024 high, a level that has been a significant reference point for months.

Bitcoin sell off (Source: TradingView)

The $73,600 level is the one my longer-term chart below has been emphasizing. Bitcoin is expected to treat previous highs as support in a strong trend. When it fails to do so, the market begins to seek the next support level, which is around $56,100, a level that was tested multiple times in 2024. Below that, attention shifts to the $40,000s.

Long-term Bitcoin price since 2024 (Source: TradingView)

With the price hovering around $70,000, the path to $56,100 represents a risk assessment rather than a prediction. It is approximately a 20% drop away, and this scenario becomes more probable when the market is compelled to sell rather than choosing to do so.

ETF flows contributed to the rally, and they are now a factor in the selling pressure

The clearest way to comprehend this Bitcoin movement is to stop debating narratives and start observing the underlying mechanics.

Spot Bitcoin ETF flows have been the most crucial marginal indicator since these products were introduced. When flows are consistently positive, dips are bought more rapidly. When flows reverse and remain negative, the market loses its support.

Data from Farside indicates that the late January and early February period has been characterized by significant outflows and unsuccessful rebounds.

In the days surrounding the current downturn:

• * Jan 29, net spot Bitcoin ETF flow was approximately -$817.8 million.
• Jan 30, net flow was about -$509.7 million.
• Feb 2, the market finally experienced relief, with net inflows of about +$561.8 million.
• Feb 3, the bid faded again, resulting in about -$272.0 million.
• Feb 4, selling intensified, with approximately -$544.9 million.

This reflects a market unable to sustain positive news. A strong inflow day occurs, a bounce follows, only to be overwhelmed by the next wave of selling.

This does not imply that ETFs are the sole price driver, yet they provide the best daily insight into whether genuine demand is entering through the largest, most regulated entry point in the market.

The current trend indicates that demand is cautious while supply is ample.

The October to February narrative is one prolonged mood swing

For a broader perspective, one should revisit October 2025, as it resembles the beginning of a conclusion.

In early October, the ETF demand was still exhibiting substantial strength. Farside data reveals net inflows of approximately:

• +$675.8 million on Oct 1
• +$627.2 million on Oct 2
• +$985.1 million on Oct 3
• +$1.205 billion on Oct 6

This level of inflow encourages traders to feel confident about purchasing any dips, as those dips continue to vanish.

However, later in October, the sentiment shifted. On Oct 16, net flow turned negative at about -$530 million. Farside data shows further outflows followed, with additional significant declines on Oct 29 and Oct 30 at approximately -$470 million and -$488.4 million, respectively.

November brought outflow figures that resembled a warning signal. On Nov 20 alone, net outflows reached around -$903.2 million.

January was marked by volatility. Inflows returned, with Jan 5 showing around +$697 million. Then selling resumed, with Jan 6 at about -$243 million, Jan 7 at about -$486 million, and Jan 29 at about -$817 million.

The focus should not be on individual days but rather on the overall character of the market. When flows are large and erratic, the market becomes fragile, as positioning becomes unstable.

Since Jan 15, there have only been two days with net positive flows.

Fragile positioning collapses under macroeconomic pressure.

Macro pressure is escalating again, and inflation is the reason the market feels constrained

Bitcoin proponents can endure negative headlines when liquidity is increasing. They find it challenging when the central bank conveys a different message, even subtly.

On Jan 28, 2026, the Federal Reserve’s implementation note set the federal funds target range at 3.5% to 3.75%.

A 3 handle indicates that cuts have already occurred compared to the peak, yet the crucial aspect is the underlying tone: inflation remains significant, volatility is still a concern, and policy does not shift merely because the markets desire it.

The inflation warning is becoming more pronounced, emanating from credible sources.

An analysis from PIIE suggests that the risk of higher inflation in 2026 is being underestimated, citing tariffs, fiscal dynamics, labor market tightness, and shifting expectations as potential contributors.

Tariffs are particularly relevant here, as they represent a policy that can negatively impact both growth and prices simultaneously, a combination that markets typically dislike.

The Fed itself has outlined the potential consequences in its research. A note from FEDS indicates that increased trade costs, including tariffs and disruptions, can elevate CPI inflation, with measurable impacts.

The political landscape is complex, and the economic implications unfold slowly. The market reacts to both, often in a turbulent manner.

Even the IMF’s stance has shifted toward caution regarding trade disruptions. In January, the IMF noted that the global economy has demonstrated resilience following a tariff shock, while cautioning about rising risks and the accumulating negative effects of trade disruptions over time.

Simultaneously, the trade policy environment is described as tumultuous. CFR highlights the resurgence of tariff threats and the uncertainty associated with a trade strategy driven by the White House.

When all these factors are combined, traders express a sentiment in private: the recovery trade appears poised to emerge, yet inflation risks pull it back into confinement.

Bitcoin’s most favorable moments occur when the market anticipates liquidity influx, and when inflation is sufficiently subdued to permit it.

Currently, that tranquility is absent.

The cross-asset signals resemble a dollar squeeze, and Bitcoin is behaving like high beta tech once more

Bitcoin exhibits a clear correlation with the broader risk landscape.

It has aligned more closely with US equity futures than with gold, and it tends to move inversely when the dollar strengthens. This indicates that Bitcoin continues to trade as a risk asset during periods of rising stress, and this week, stress has been escalating.

This is also why the silver crash is significant for crypto investors.

When silver experiences double-digit declines, and Bitcoin also drops by double digits, the common factor is leverage and forced selling. The initial wave impacts the most crowded trades, while the subsequent wave affects whatever can be liquidated quickly.

Crypto is always liquid.

Oil is rising for troubling reasons, contributing to the unease

Oil prices have increased modestly during this period, but the reasons are unsettling.

There are fresh geopolitical risks surrounding Venezuelan supply. Price movements linked to the blockade announcement and broader supply risk headlines following the capture of Maduro continue to pressure markets.

Simultaneously, the medium-term narrative for oil has been one of oversupply, with Trafigura warning of a potential “super glut” in 2026 as supply growth outpaces demand.

Oil rising due to geopolitical risks while the market is already concerned about inflation creates a toxic mix. It adds complexity to the inflation narrative, increases pressure on the Fed, and heightens anxiety among traders who are already facing margin calls.

What to monitor next, if you aim to navigate the upcoming week

The inclination may be to identify a bottom and construct a narrative around it. However, the market has not yet warranted that privilege.

A clearer perspective is as follows.

Bitcoin has one objective if it wishes to halt its decline: reclaim $73,600 and maintain that level. This is the 2024 high, and it now represents the dividing line between a severe correction and a deeper reset toward the next significant support level around $56,100.

Refer to my article from November, where I specifically outlined this scenario:

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ETF flows also have a role to play: stabilization. The data from Farside has been fluctuating between significant outflows and brief inflows, which is indicative of a fragile market.

Macro conditions have their own responsibility: to stabilize. This means inflation expectations must cease their upward creep, tariff-related headlines need to stop introducing uncertainty, and the Fed requires space to maneuver, as the market is currently trading as if it is perpetually preparing for the next inflation surprise.

Silver is the unpredictable factor, as it has already demonstrated the consequences of leverage combined with margin increases.

This week feels like the moment when margin calls became a global phenomenon.

Crypto traders have experienced forced selling for years; it typically begins within the ecosystem and usually concludes there as well.

This time, however, the stress is manifesting in traditional markets too, in metals, in interest rate anxieties, in trade disruption news, and in the dollar.

The narrative remains centered on Bitcoin, yet the context is broader and appears considerably less forgiving.

The post Markets plunge as Bitcoin and silver just triggered a global margin call after inflation warnings made a recovery look impossible appeared first on CryptoSlate.