Seriously, I can’t wrap my head around this. Every time the market crashes, we see the same story: millions (sometimes billions) of dollars in leveraged positions wiped out in a matter of hours. It’s like a ritual at this point. But why do so many people keep doing it?
I get it—leverage sounds appealing. You think, “If I’m confident that Bitcoin is going up, why not amplify my gains with a 10x long?” On paper, it makes perfect sense. Why settle for a 5% move when you can make 50%? But the thing is, markets don’t move the way you want them to. Even in a clear bull run, there are wild pullbacks and unexpected wicks that liquidate leveraged positions in seconds.
And that’s the core problem: leverage amplifies both your gains and your losses. Most people don’t realize that when you leverage 10x, it only takes a 10% move in the wrong direction for you to lose everything. In crypto, where 10% swings can happen in an hour, you’re basically playing with fire.
What’s crazy to me is how predictable this has become. Every major price drop is accompanied by massive liquidation events. Exchanges rake in fees, whales manipulate prices to trigger liquidations, and retail traders end up losing their stacks. It’s like a game of “who gets wrecked first,” and the answer is almost always the guy using too much leverage.
But why don’t people learn? Is it greed? Ignorance? Overconfidence? I think it’s a mix of all three. Greed makes you want bigger gains. Ignorance makes you underestimate the risks. And overconfidence makes you think you’re smarter than the market. Add in influencers hyping up “easy” gains with leverage and exchanges pushing high-leverage options, and it’s no wonder so many people get sucked in.
Here’s the thing: you don’t need leverage to make life-changing money in crypto. The market is volatile enough that even a simple 1x position can lead to massive gains if you time it right. And if you don’t time it right, at least you won’t get wiped out by a single bad move.
I’m not saying leverage has no place. Professional traders with strict risk management can use it effectively. But for 99% of people, it’s a recipe for disaster. If you’re leveraging without fully understanding the risks or without proper stop-losses, you’re basically gambling.
So, why do you think people keep doing this? Is it just the allure of quick riches? The thrill of high-stakes trading? Or is it a lack of education about how leverage actually works?
Let me know your thoughts. I feel like this is a conversation we need to have more often because too many people are losing their hard-earned money for no good reason.