I've talked about this many times. In 2021, the CTO of my company took $200,000 to go long on $BTC. The day before the crash on May 19, we were having dinner together and discussing whether to remove the leverage. His exact words were:

"I only have five times leverage and added some margin. If this can blow up, then we all die together. If we all die, I don't care."

He probably opened his position at just under $50,000 with five times leverage and added some margin. On May 19, the lowest price was $28,688. When he got liquidated, he didn't say a word, smoked an entire box of cigarettes, and left early.

$500,000 was his first pot of gold in the crypto world, and just like that, it was all gone. Indeed, he wasn't the only one who got liquidated that day. Six months later, Bitcoin and $ETH both reached new highs. I continued to do what I needed to do with my spot holdings, but he lost the opportunity at the table.

He is less than two years younger than me and is still in Beijing writing game code. His pure salary has halved, and he has a home in Shanghai. He moved to Beijing because he couldn't find a job in Shanghai. For many years in Beijing, he has been squeezed into a small rental room, but he is still lucky. After all, he has a house, a car, and no loans in Shanghai, along with some stocks and savings. He just doesn't want to live off his savings, and there is also economic pressure.

Although reaching this point, the contract liquidation may not be 100% the reason, if he had listened to advice and held spot like us back then, he would probably be more at ease now.

Contracts are a one-way street. You can make money 100 times, but one loss can wipe it all out. Indeed, many people make high profits from contracts, with some making millions or even tens of millions of dollars in one go. But to be honest, it's rare to find someone who solely relies on contracts to get rich and continues to trade contracts. There are a few friends who made money and completely stepped back, starting to do low-risk trading, and they are doing quite well now.

So, contracts + leverage are inherently risky. One must avoid arrogance and greed and try to hold on for a bit longer.

This article is sponsored by #Bitget ｜ @Bitget_zh

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