Bloomberg Commodity Index officially initiates its annual rebalancing, with the next few days expected to see the liquidation of approximately $14.1 billion in precious metal reserves, including $7.1 billion in gold and $7 billion in silver. This move may create short-term market volatility, but from a fundamental perspective, many large financial institutions such as Scotiabank and SSG Group are adopting a similar strategy: buying on dips.

Why is this outlook justified? The supply and demand fundamentals for gold and silver have not deteriorated; instead, they continue to strengthen amid geopolitical uncertainties and inflation expectations. When such systemic sell-offs occur, they often present excellent opportunities for institutional positioning. During the same period, commodities like crude oil, cocoa, and sugar are also facing similar rebalancing pressures, with cocoa exhibiting particularly high volatility, potentially creating significant trading opportunities.

For the crypto market, this chain of logic is worth noting. Although gold and silver do not have directly linked on-chain tokens, Bitcoin has long been regarded as "digital gold"—showing a clear correlation with traditional precious metals. When precious metals fluctuate due to rebalancing, the market’s demand for safe-haven assets is re-priced, often driving Bitcoin’s price movements.

Several trading targets to watch include: BTC as a digital gold proxy, which may become a capital transfer destination when precious metals are under pressure; ETH, which, despite its higher risk asset nature, can also benefit when market liquidity is ample; and PAXG, the most direct choice—this gold-backed token is directly pegged to the spot gold price, with its price movements mirroring the precious metals market.

For short-term trading strategies, three points are recommended: First, closely monitor the rhythm of precious metal fluctuations, as extreme market movements may occur during the most intense sell-off periods; second, keep an eye on commodities like crude oil and cocoa, as their correlation with the crypto market is increasing; third, the linkage between BTC and PAXG may be quite tight, so comparing their price trends can help gauge market sentiment shifts.

Of course, whether this sell-off can trigger a V-shaped rebound depends on market liquidity and subsequent funding conditions, but based on historical experience, systemic rebalancing in commodities often attracts institutional bottom-fishing, making the probability of a rebound in precious metals quite considerable.