The final week of January 2026 marked one of the most turbulent periods for global markets in decades. Gold rocketed to an all-time high of $5,608 per ounce in a matter of days, only to plunge 9-12%. Bitcoin slumped below $79,000 for the first time since April 2025. Silver crashed 30% in a single trading session—its worst day since 1980. The trigger was one man: Kevin Warsh.

Markets received this chaotic "gift" directly from Donald Trump. On January 30, he announced the nomination of former Fed Governor Kevin Warsh to succeed Jerome Powell as Chairman of the Federal Reserve, whose term expires in May.

Gold: From Euphoria to Crash in 48 Hours

Throughout January, gold shattered record after record. On January 12, it crossed the $4,600 mark for the first time; by January 25-26, it broke through $5,000, and on January 29, it peaked at $5,608 per ounce. In a single month, the metal surged approximately 20%—its strongest January performance since the 1980s.

Several factors drove prices upward simultaneously:

Geopolitical Instability: The US capture of Venezuelan President Maduro, Trump's threats regarding Greenland and Iran, and escalating tensions in the Middle East.

A Weak Dollar: The dollar index had shed approximately 8.8% since late 2024.

Central Bank Buying: Over the first 11 months of 2025, central banks purchased 297 tons, with Poland leading the pack at 95 tons. Inflows into gold ETFs hit a record $89 billion in 2025.

Goldman Sachs raised its year-end 2026 price forecast to $5,400 per ounce. HSBC predicted $5,000 in the first half of the year, attributing the rally to a combination of safe-haven demand, a soft dollar, and monetary policy uncertainty.

Then, everything flipped. On January 30, news of Warsh's nomination instantly strengthened the dollar and sent precious metals crashing. Gold lost about 12% in a day, falling below $5,000. Silver plummeted 28-33% from a record $121 to $76-83 per ounce—levels unseen since 1980, when the Hunt brothers attempted to corner the market. Bloomberg described it as the largest intraday drop for gold since the early 1980s.

Warsh is known for his "hawkish" stance—he advocates for strict monetary discipline, higher real rates, and reducing the Fed's balance sheet. During the 2008 crisis, he emphasized inflation risks even as the economy teetered on the brink of deflation.

Evercore ISI summarized the market reaction succinctly: markets are "trading Warsh as a hawk." However, analysts warned that markets might be overreacting, noting that Warsh is more of a pragmatist than an ideological hawk.

Despite the collapse, gold ended January with a gain of roughly 15%. Analysts at Standard Chartered, Goldman Sachs, and OCBC maintain a bullish long-term outlook, pointing out that the structural drivers of the rally have not disappeared.

Bitcoin: Three Months of Outflows and Panic

Bitcoin endured a difficult January. At the start of the month, it traded near $90,000 but gradually lost ground. On January 29, it fell to $85,200—its 2026 low at the time. Following Warsh's nomination on January 30, it dipped to $81,000. By the weekend, January 31, it had slipped below $79,000.

According to CNBC, Bitcoin was trading around $77,000–79,000 on Saturday evening, while Ethereum lost about 9% ($2,445) and Solana dropped nearly 10% ($105).

Bitcoin's troubles extend beyond a single decision by Trump. Spot Bitcoin ETFs in the US have recorded net outflows for three consecutive months. During this period, investors withdrew $5.7 billion. On January 29 alone, outflows amounted to $818 million—the largest single-day figure since November. In total, ETFs saw a net outflow of $1.61 billion in January.

Santiment analysts noted that negative sentiment in the crypto community has reached its 2026 peak. Bitcoin's RSI dropped to 24.99—oversold territory. Glassnode warns of a "short gamma pocket" at the $80,000 level worth $1.25 billion; a breach here could open the path to $70,000.

Miners are adding to the pressure by regularly sending coins to exchanges. The derivatives market continues to unwind leveraged positions that accumulated at the end of last year.

There is, however, an alternative view. Wincent notes that the parabolic rise in commodities over recent months had drawn capital away from the crypto market, and this dynamic may now shift. Bitwise believes Warsh's policies could ultimately prove positive for Bitcoin if strict conditions destabilize traditional markets. Meanwhile, Binance announced it would convert its $1 billion SAFU reserve fund from stablecoins into Bitcoin over the next 30 days.

What Lies Ahead

February will be decisive for both markets. Warsh still faces Senate confirmation, and months remain before the Fed leadership officially changes hands. Geopolitical uncertainty persists: tensions surrounding Iran have escalated following the explosion at the port of Bandar Abbas, and Trump's tariff threats continue to weigh on markets.

For gold, the key question is whether the $4,800–5,000 level will hold as support or if the sell-off will continue. For Bitcoin, the question is whether the $78,000–80,000 zone holds, or if the road to $70,000 opens up.