Copper’s AI-Driven Rally Exposes Liquidity Trap Crypto Traders Overlook
Copper futures surged to a record $6.06/pound this week, overshadowed by gold and silver's safe-haven narrative. The COMEX update showed open interest climbing to 269,825 contracts despite a dip in volume—a divergence signaling institutional positioning rather than speculative froth.
This industrial metal's rally carries broader implications: copper demand reflects real-world economic activity, not just inflationary hedges. When the Fed's 'higher for longer' rate stance collides with rising industrial commodity prices, liquidity conditions tighten—a headwind for crypto's correlation trade.
Market mechanics tell the story. The 3,588-contract open interest jump contrasts with sliding volumes, suggesting accumulation by physical players. Such moves historically precede inflection points in risk assets, including bitcoin and Ethereum, which remain loosely tethered to commodity-driven liquidity shifts.
