Why do some people end up losing everything by trading cryptocurrencies?

Just look at me: I lost more than ten million in the crypto market, and I’m still $4 million in debt. Overall, the biggest problem is the inevitable outcome of the three-way overlap of mechanism + human nature + the environment.

1. Leverage is “legal usury”

The scariest thing in the crypto market isn’t up or down—it’s leverage.

• 10x leverage: a 10% move, and your principal is gone
• 20x leverage: a 5% move, and you get liquidated
• 50/100x: a 1%～2% move, and it’s over

When the market shakes just a little, a single wick, your savings from years can be wiped out in minutes.

This isn’t investing—it’s accelerated suicide.

2. A human nature death spiral: when you make money you want more, when you lose you want to break even

Most people who go bankrupt follow this path:

1. Make a little profit → think you’re a genius
2. Increase position size → make more → get even more inflated
3. One big drop → unrealized loss
4. Unwilling to accept it → add more, hold the bag, bet on a reversal
5. Liquidation → principal is gone
6. Borrow money, take out loans, use credit cards to break even
7. Liquidate again → completely end up broke

As long as you want to get back to even, the market can make you lose until you’re desperate.

3. Pin insertion, rug-pulls, and malicious liquidations—you can’t beat this

The crypto market isn’t a fair playing field:

• Large players precisely sweep stop-losses
• Exchanges insert pins, poking up and down
• Extreme market conditions freeze and you can’t close positions
• Not enough depth, resulting in massive slippage

You think it’s because your technicals aren’t good, but it’s actually that you’re betting against a casino + robots + the syndicate.

4. When you profit it’s numbers, when you lose it’s real money

When prices go up:

• Your account numbers look good, and you don’t want to sell
• You keep thinking you can go higher

When prices fall:

• You go from profit to loss, and you panic
• You go from a loss to a deep hold, and you try to ride it out
• In the end, you get liquidated and everything resets to zero

Profit is unrealized; loss is real debt.

5. Many people trade with “life-or-death money”

People who go broke almost always have one thing in common:

• Spend their living expenses
• Use mortgage and car loan payments
• Use their parents’ retirement money
• Use online loans, credit cards, high-interest loans

Once they start losing, there’s no buffer at all, and they can only sink deeper and deeper until everything collapses.

6. The harder you work, the more you lose; the more you watch the screen, the worse it gets

The more you stare at the chart:

• The more frequently you trade
• The more emotional you get
• The more you chase pumps and sell dumps
• Fees + losses eat everything

In crypto, diligence doesn’t make money—only restraint makes money. But most people can’t do restraint.

7. The most deadly one: survivorship bias

You only see who made it big, but you don’t see that 99 out of 100 people get liquidated.

Media only showcases myths and never buries the bodies. You think you’re the chosen one, but you’re just grass waiting to be harvested.

One-sentence summary of why people end up broke

High leverage magnifies the risk, greed keeps pushing people to add more, loss strips people of rationality, borrowing removes any way out, and the market is designed to harvest people who won’t admit defeat.

As long as you stack leverage + heavy positions + borrowing + not backing down,
going broke is only a matter of time.

If you’re willing, I can tell you the “rules for trading crypto but never going bankrupt”, as long as you stick to a few things, even in the most extreme market conditions, you won’t be finished.