Critical Metals Plummets 8.7%: What's Behind the Sudden Downturn?

Summary
• Critical Metals (CRML) trades at $13.47, down 8.73% from its $14.76 previous close
• Intraday range spans $13.29 to $14.67, reflecting sharp volatility
• Tradr’s 2X Long CRML ETF (CRMX) debuts as new leveraged tool

Today’s dramatic selloff in Critical Metals has sent shockwaves through the rare earth sector, with the stock collapsing to a 52-week low of $13.29. The move follows a strategic pivot in Greenland and a surge in leveraged ETF activity, raising questions about market sentiment and technical triggers. With turnover hitting 11.5 million shares and RSI at 83.1, the stock faces critical junctures ahead.

Strategic Expansion and Market Volatility Drive CRML's Sharp Decline
Critical Metals’ 8.7% intraday drop stems from a confluence of strategic developments and sector-wide pressures. The company’s recent approval to construct a pilot plant in Greenland—aimed at advancing its Tanbreez Project—has sparked mixed reactions. While long-term optimism persists, short-term investors are spooked by execution risks and geopolitical uncertainties. Additionally, the launch of Tradr’s 2X Long CRML ETF (CRMX) has amplified volatility, as leveraged products often exacerbate price swings. Analysts note that the stock’s 52-week high of $32.15 now feels distant, with the P/B ratio of 17.78 suggesting overvaluation against fundamentals.

Rare Earth Sector Volatility: CRML's Decline Amid MP Materials' Modest Drop
The rare earth sector remains fragmented, with MP Materials (MP) down 0.66% as of 17:20 EST. While CRML’s 8.7% plunge dwarfs MP’s decline, both stocks reflect broader investor caution. MP’s recent revenue beat and Pentagon partnership highlight sector resilience, but CRML’s Greenland project faces unique execution risks. The sector’s 52-week low of $1.23 underscores its cyclical nature, with geopolitical tensions and refining bottlenecks—particularly China’s dominance in processing—weighing on sentiment.

Navigating CRML's Volatility: ETFs and Options for High-Conviction Traders
• MACD: 1.27 (bullish), Signal Line: 0.38, Histogram: 0.89 (momentum waning)
• RSI: 83.1 (overbought), Bollinger Bands: $3.83–$14.84 (price near upper band)
• 200D MA: $6.15 (far below current price), Support/Resistance: $8.04–$1.37

CRML’s technicals paint a mixed picture: overbought RSI and a narrowing MACD histogram suggest a potential pullback, while the 200D MA remains a distant floor. For short-term traders, the Tradr 2X Long CRML ETF (CRMX) offers amplified exposure, though leveraged products require daily rebalancing. Two options stand out for bearish scenarios:

• CRML20260123P13 (Put):
- Strike: $13, Expiry: 2026-01-23
- IV: 147.66% (extreme), Leverage: 12.29%, Delta: -0.387, Theta: -0.036, Gamma: 0.110, Turnover: 11,438
- IV: High volatility, Leverage: Moderate, Delta: Sensitive to price drops, Gamma: Strong sensitivity to movement
- This put benefits from CRML’s overbought RSI and Bollinger Band proximity. A 5% downside to $12.80 would yield a $0.20 payoff, amplifying losses if the stock stabilizes.

• CRML20260123C13 (Call):
- Strike: $13, Expiry: 2026-01-23
- IV: 138.04% (high), Leverage: 8.72%, Delta: 0.614, Theta: -0.082, Gamma: 0.118, Turnover: 4,551
- IV: Elevated volatility, Leverage: Low, Delta: Strong directional bias, Gamma: High sensitivity
- This call suits aggressive bulls betting on a rebound above $13.50. However, its 8.7% leverage ratio limits upside unless CRML breaks out of its consolidation.

If $12.50 breaks, CRML20260123P13 offers short-side potential. Aggressive bulls may consider CRMX into a bounce above $14.50.

Backtest Critical Metals Stock Performance
The iShares Core MSCI All World ex USA ETF (CRML) has demonstrated resilience following a -9% intraday plunge from 2022 to the present. Backtesting reveals a 3-day win rate of 45.20%, a 10-day win rate of 51.60%, and a 30-day win rate of 53.60%, indicating a higher probability of positive returns in the short term. The average 3-day return is 1.33%, the 10-day return is 4.50%, and the 30-day return is 13.16%, suggesting that CRML tends to recover and even exceed its pre-plunge levels in the medium to long term. The maximum return during the backtest was 20.28% over 59 days, highlighting CRML's potential for substantial rebounds after adverse events.

CRML at Crossroads: Watch Support Levels and Sector Catalysts
Critical Metals’ 8.7% drop has exposed both its strategic promise and execution risks. While the Greenland project and Tradr’s leveraged ETF signal long-term potential, near-term technicals—overbought RSI and a narrowing MACD—hint at a pullback. Investors should monitor the $8.04 support level and the sector leader MP Materials (MP), which is down 0.66%. A break below $12.50 could trigger a test of the 52-week low, while a rebound above $14.50 may reignite bullish momentum. Watch for $12.50 breakdown or regulatory reaction.