22nd August 2023 > > Leverage.

tl;dr

Never trade cryptos with leverage.

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With 10-year yields breaching 16-year highs, risk assets stay on red alert.

Curious Cryptos’ Commentary – Why you should never use leverage when trading cryptos

A favourite topic in the offices at CCC Towers is to make fun of the leveraged children.

Retail investors should never trade any financial asset on a leveraged basis, let only cryptos. Volatility will kill you, but before then you just pay away your hard-earned dollars to hedge funds, investment banks, and those who happened to briefly get lucky.

One chap, who is deeply involved in crypto finance markets, saw the recent 10% sell-off as a buying opportunity. Which is fair enough, but the recent lack of movement in crypto prices has been an aberration, so don’t get fooled by a few weeks of data. 10% daily moves are not out of the ordinary. So, yes, 10% off in a day makes it appealing to bring forward your weekly or monthly crypto buys as you take advantage of dollar cost averaging.

But 10% off in just one day does not make it appealing to go balls in.

This chap – whose name you can find, but I will spare his blushes – went balls in at 100 times leverage on BTC, ETH, and ARB.

Is he mad? 100 TIMES LEVERAGE. This is the definition of insanity.

You want to know the result? A very painful loss of $432,000 on 14 long trades during the 18th of August 2023 alone. His total losses so far are over a bar:

He’s not the only one.

The MUX Leaderboard (https://app.mux.network/#/leaderboard/traders?chainId=42161) shows that in the last month the biggest winner has won just $38k but the five largest losers clock in at between $170k and $550k each. A grand total of $1.79mm.

MUX is a decentralised leveraged crypto exchange whose owners spelt the name wrong. They meant MUGS.