Cryptotrading is often marketed as a way to make quick and easy profits.
This statement is false; unfortunately, many ordinary traders are tempted by the profits advertised by reliable traders or individuals who claim to be traders but are fraudsters.
In crypto trading, like buying and selling other assets, there is a high potential for profit and loss, so there will be a possibility for a trader to lose.
If crypto trading is not paired with science and a good ecosystem, then it is likely that significant losses will occur.
An example is a trader named “Satto,” who went viral while trading on youtube and lost $10M in seconds. Apart from that, many traders also feel the loss due to their own or external shortcomings. This article will give examples of five traders who suffered heavy losses due to a lack of knowledge, experience, and an unsupportive ecosystem.
Lost $1,8M in The First 20 Minutes
The first one is a trader from Scotland who was involved in a case due to trading using other people’s money.
The trader, who goes by the pseudonym Jack, reportedly lost around IDR 27.3 billion in just 20 minutes after trying to trade with crypto.
He reportedly used his company’s money which he had access to because he worked in finance.
Initially, he tried trading in crypto on spot assets, namely Bitcoin, and made a profit but did not have high experience because he was learning.
He also recovered his losses in just one trade or position, making him overconfident.
After his confidence rose, he started taking his company’s money and hoped the same would happen with his one success.
As a result, he suffered a loss where he lost IDR 27.3 billion in just 20 minutes and ended up with a massive debt to his company that the company itself did not know.
He has managed to return the money, but he is still in the rehabilitation stage because he has a psychological disorder that keeps his name secret. From this case, we can learn that in trading, we must have money that is willing to lose or not important cash because there is always the potential for loss.
Lost $722M in 4 Minutes
The second is a trader who is a whale in the Bitcoin world, where he trades through the spot market.
He is one of the giant whales with ownership of 288 thousand Bitcoins and several other cryptos.
The loss he suffered was $722Min just 4 Hours after the majority of crypto assets experienced a price decline, and he sold his losses to maintain his risk management.
He experienced this loss after opening trade positions in several cryptocurrencies. It was noted that he opened positions in BTC, XRP, ETH, and several other cryptos.
The correction was led by Bitcoin, which was down about 16% in less than a day. He felt his loss in the middle of the night until the early morning in 4 hours.
As a result, he lost $722M, but looking at his portfolio, he did not experience any psychological problems because he still had a lot in his investment portfolio.
All of this happened Friday through Saturday morning. For experienced traders, Friday to Saturday is a time of high volatility, so this correction is very natural.
This disadvantage teaches that even if risk management is taken care of, a trader can also experience heavy losses, especially if opening several positions simultaneously. Risk management, if not paired with the direction of the number of positions opened, can also bring significant losses.
Lost $10.7M in 6 Hours
The third trader is an individual who loses $10.7M within 6 Hours of trading in the futures market.
He suffered losses after most crypto assets appreciated, and the underlying crypto asset futures contract moved up when he opened a short position.
When opening a short position, a trader will predict the price of a crypto asset to fall for him to profit in the futures market.
This trader suffered a loss because he opened a short futures position in the THETA perpetual futures contract, and the price appreciated up to 18% in 24 hours.
This loss occurs in the middle of the night to early morning, when the failure occurs in the first 6 hours.
Unfortunately, at that time, this trader did not use automatic orders to cover losses, commonly called stop losses.
His losses continue to run beyond his risk management and make him lose up to $10.7M, depleting his portfolio or making a margin call. From these losses, it can be learned that a trader must be disciplined in using stop losses, especially in times of high volatility, to make successful trades. The goal is that the funds used can last long term, according to risk management.
Lost $2B in 24 Hours
Next are Bitcoin traders, who also trade in the spot market. He reportedly lost his funds due to market volatility from the macroeconomic.
At that time, some negative sentiments made the majority of cryptos, especially Bitcoin, drop significantly by almost 20% in a day.
These sentiments are the invasion of Ukraine from Russia, which also involved America, the chaos in Canada, and the benchmark interest rate that began to rise from the American Central Bank.
After some of the news was published, the price of most crypto experienced a significant correction, and unfortunately, this trader was asleep.
Seeing the transactions in spot assets, this trader does not use automatic stop loss orders, so the losses continue to run.
As a result, he realized within 24 hours and lost $2B from just one Bitcoin transaction. From this case, it can be learned that macroeconomic factors are one aspect that needs to be considered because, currently, crypto has entered the category of available financial assets, which can also be influenced by macroeconomics like other assets.
Lost $19.4B in 48 Hours
Last is one of the most critical cases in the crypto world that occurred by a trader named Bill Hwang, who is famous in the crypto world.
Bill Hwang is one of the great traders because of his history; since 2013, he has been in the crypto world and has made high profits.
He earned profits of hundreds or even thousands of percent from 2013 to 2020, but his glory ended in 2021.
After experiencing fame, he began to be trusted by many companies and started managing funds from several companies.
The case that occurred was a loss to his own company, which he built named Archegos, a legal fund management company.
He suffered a loss of up to $19.4B in just 48 hours or two days caused by a significant price correction in the crypto market.
At that time, he opened positions in the derivatives market to seek profit from his managed funds. He has around $1.4B funds, and then he uses debt funds or leverage from several banks and increases his position by 23.3 times.
As a result, he made trade transactions for his company with funds amounting to $33.9B, which was eventually lost due to a margin call.
This margin call differs from trading using an exchange because it is at the institutional level and uses bank loans.
When a loss occurs, the bank provides the loan demands and even withdraws the loaned funds, resulting in a large-scale margin call.
As a result, he lost $19.4B and was arrested by the authorities for committing 11 violations of law in his transaction.
From this incident, it can be learned that if you want to use leverage, make sure the funds used are not excessive so that they are following the risk that can be borne.
In addition, something illegal will also bring problems, especially in the financial world, so it is better to keep transactions in the legal realm.
Of course, there are many more losses that are even greater. However, these five events can provide lessons and an overview of how the crypto trading world should be avoided and what to do if you want to trade crypto.
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