Home Cryptocurrency “Forewarned is Forearmed: The Bitter Lesson From a Coin Guru’s Account Disaster”

Cryptocurrency

“Forewarned is Forearmed: The Bitter Lesson From a Coin Guru’s Account Disaster”

11 May, 2025

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While traditional investments such as stocks and gold have offered modest returns in the past year, typically ranging from 15-20%, the cryptocurrency market has presented investors with opportunities to multiply their capital several times over. However, this very opportunity can also be a trap for inexperienced investors who approach this market with a gambling mentality and end up losing everything, as was the case for crypto enthusiast Mạnh Nguyễn.

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From an ambitious investor to a wounded trader…

Driven by a desire to get rich, Mạnh, a Gen Z investor, entered the stock market a year ago. However, in a market that was largely sideways, he ended 2024 with a meager 3% growth in his portfolio.

Disappointed with the low returns, which were even lower than bank interest rates, and feeling unmotivated by the small amount of capital invested, Mạnh began exploring more lucrative investment avenues and soon discovered the world of cryptocurrencies.

Mạnh’s interest in crypto was piqued by his friends, who boasted of their incredible profits, sometimes reaching hundreds or even thousands of percent. Mạnh did the math, and he realized that with just a $100 investment, he could potentially make thousands of dollars if he played his cards right.

The lure of thousand-percent gains excited Mạnh.

To get started, Mạnh chose one of the largest crypto exchanges, registered an account, and deposited his initial investment of $100 (approximately 2.6 million VND). Driven by his get-rich-quick aspirations, he decided to venture into the crypto derivatives market, similar to futures trading in stocks, which allowed him to bet on price movements (up or down) with leverage of up to several hundred times his capital. This was the key to his dream of multiplying his wealth.

At first, Mạnh cautiously followed the trades of his friends, and he experienced both wins and losses. Overall, however, he managed to triple his initial capital, and his dream of getting rich seemed to be within reach.

Then disaster struck.

Mạnh’s early successes boosted his confidence, and he began to educate himself on technical analysis and trend identification. With this newfound knowledge, he started placing trades independently, gradually increasing the amounts he invested.

However, the cryptocurrency market, being a decentralized and largely unregulated space, is notorious for its extreme volatility, especially when it comes to altcoins (alternative coins created after Bitcoin) or newly launched memecoins. In this market, technical analysis and support and resistance levels are merely guidelines, as a coin’s price can surge or plummet by double-digit percentages in an instant. For traders using high leverage, this can lead to either massive gains or devastating losses, including complete account liquidation.

Mạnh experienced this volatility firsthand in a way that left him traumatized. One fine afternoon, while casually sipping his coffee, Mạnh placed a short trade on a highly volatile altcoin with a leverage of 200x. Initially, the trade went in his favor, and he found himself with a profit of 600% on his capital.

Overconfident and greedy for more gains, Mạnh decided to hold on a little longer. But in the blink of an eye, less than a minute, the price of the altcoin reversed and surged more than 14%, wiping out all his profits and resulting in a loss of over 1,000% of his capital.

A single derivatives trade wiped out Mạnh’s account in a minute.

Unwilling to accept defeat, Mạnh stubbornly held on, hoping for the price to reverse and recover his losses. However, the price continued to climb, and before he knew it, his short position was liquidated, and his account was officially “burned.”

Mạnh was left in a state of shock and disbelief as he stared at the screen. The amount of money lost was not substantial, but the emotional rollercoaster of soaring to great heights and then crashing down in an instant was difficult to bear.

Determined to recoup his losses, Mạnh deposited more money and re-entered the market, this time reverting to his old strategy of following his friends’ trades. However, his friends were also ordinary investors without any secret formulas for success, so their trades were a mix of wins and losses. Compounded by his own impulsive nature and a desire for revenge, Mạnh continued to “all-in” on altcoins with high leverage, and as expected, he suffered the inevitable consequence: his account was “burned” for the second time.

And the lessons learned…

After these consecutive blows, Mạnh decided to exit the crypto market, bruised and battered, having learned several hard lessons along the way.

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The first lesson was the importance of capital management, a matter of survival in the investment world. Inexperienced investors should avoid high leverage and only risk capital they are comfortable losing.

Secondly, knowledge is power. Even in a market prone to manipulation, technical analysis and indicators play a crucial role and should not be overlooked.

Thirdly, psychology is key. Investors must avoid a gambling mentality, refrain from letting their emotions dictate their decisions, and resist the fear of missing out (FOMO), which can lead to falling into market traps.

Lastly, the urge to “get even” with the market must be controlled. Decisions made in a state of agitation or revenge rarely end well, and often lead to account liquidation. As Mạnh learned, hindsight is 20/20, and maintaining a calm and rational mindset is essential to navigating the turbulent waters of crypto investing.

Chau An