Losing Everything in Crypto

By johnwege | johnwege | 18 Jan 2025


Most of us begin investing in the cryptocurrency market with hopes of changing our lives financially forever. Dreaming of someday finally being able to escape the 9 to 5 rat race, not worry about money and potentially even retire. However, many of us forget that this market is incredibly risky. The volatility alone often causes too much stress for most to handle. But then there is also a darker side to the crypto market that we don’t like to talk about. We praise Bitcoin, Ethereum, and the market in general for giving freedom back to the people. Being able to take full custody of your assets in a trustless, decentralized manner. Also having the ability to send transactions anytime you want, to anyone you want, without having to rely on a third party. 

Those are all great things, but with that power also comes great danger. One of the phrases that you’ll often hear me say is that cryptocurrency is like the Wild West. There is danger lurking around you trying to take your money. If you’re not careful even for a second, you could lose everything.

Today we will be continuing my Crypto Tales series, chronicling my journey through this industry. The experiences that I have had, and the things I have encountered. It’s my hope that this will be a great warning to you, and hopefully prevent you from having the pain of losing everything. That’s something I wouldn’t wish on anyone.

 During the last bull run, everyone was obsessed about earning a yield with their crypto, including me. Thankfully this story isn’t about me, but about someone that I know. The trend of the industry was lending out your crypto to earn passive income. BlockFi, Celsius, Voyager, and Nexo were some of the most popular services. The most tempting aspect was how easy it was to earn. With only a few clicks, you could set your crypto and forget it. Earning passive income constantly, even while sleeping.

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My acquaintance was an avid Celsius and BlockFi user. He had several Ethereum that he was lending on both services. Enough ETH that it would someday likely be worth a fortune; perhaps even enough to live off the passive income earned by lending or staking. But as you probably already know, the summer of insolvencies began, and all of his Ethereum on Celsius was frozen. He was distraught and in shock. Thankfully he was able to withdraw the Ethereum that he had on BlockFi.

Half his stack of Ethereum was frozen on Celsius, but the other half he was able to withdraw to cold storage. Now that we know the future that BlockFi would have, we might consider him lucky. But, he was in a deeply depressed state of mind. That was money that he was counting on. He had already been dreaming and planning his retirement with it. In an instant, half of it was gone.

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He decided he would get it all back. The market had dropped so drastically that it would surely go back up soon. And so he used his remaining Ethereum to make longs with leverage. In his opinion, it was a sure thing. Unfortunately, that was only the start of the insolvency contagion and the market seemed to never stop dropping. Eventually, he was liquidated from his position. He had worked for years at his job to earn the money he invested into the crypto market. And then spent several years building up his crypto portfolio into a small fortune. In a matter of only a few days, he had lost everything. The worst part was that he had no idea how to even begin telling his wife about what had happened.

Not your keys, not your crypto, and revenge trading. Those are the two main takeaways. This market is incredibly stressful and emotionally draining. All it takes is a few moments of weakness or panic, and it can cause you to lose everything. I hope none of you ever experience what this person had to go through.

How about you? What is your crypto horror story?

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johnwege
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Stay Curious. | Bitcoin | Macro | Business Email: [email protected]


johnwege
johnwege

The Bitcoin Frontier Business Email: [email protected]

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