At the end of December last year, the silver market experienced a thrilling sell-off. Prices plummeted from a historical high of $83.62 to $72.62, with a single-day drop of over 10%. At first glance, it was indeed shocking, but what exactly happened behind this sharp decline?

The root cause is actually not complicated: firstly, futures exchanges continuously raised margin requirements; secondly, liquidity in the US stock market suddenly tightened, forcing investors to liquidate positions; thirdly, geopolitical tensions suddenly escalated, squeezing long positions. The combination of these three pressures led to this flash crash.

What is even more noteworthy is the change on the supply side. China will implement export controls on silver starting January 1, 2026, which could have a profound impact on the global silver market. However, there is an interesting phenomenon: demand in the physical markets in Asia remains strong. No matter how sharp the price drops, buyers’ hands remain steady. This indicates that market expectations for the fundamentals of silver have not changed.

Looking at history, every regulatory adjustment tends to trigger short-term price volatility. But sharp fluctuations do not necessarily mean a trend reversal. Many interpret this plunge as a bearish signal, but a more accurate view is—this is a "deep squat" during a bull market, just gathering strength for the next upward move.