death_wish
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Activity: 70
Merit: 320
Take profit in BTC. Account PnL in BTC. BTC=money.
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This will surprise nobody: I got liquidated.
It happened as I was trying to place a sell order, to shave off a bit more and push the liquidation price a bit lower. An exchange software error caused by overload from too much volume prevented my order from going through. I sat there watching helplessly as BTC vanished from my account.
I now have much less than one bitcoin remaining - loaded with debt, and still at risk.
Enough about me, for the moment. I fell into this trap, when yes, I do know better than that, and I did know better. Jay is correct in observing that, in essence (here summarizing), I seem to know an awful lot for an idiot who just got wrecked by clueless newbie mistakes. I frankly deserve some pain now.
Please let this be somehow useful. Show this story to any actual newbies who want to increase their BTC with just a wee little bit of margin - or who think the "don't sell your crypto; borrow against it!" ads are a good idea. That's how I started: With just a wee little debt that seemed perfectly safe, which I could repay at any time. It turned out to be like trying drugs "just once".
A BTC-backed loan can be safe, but you will not get those lending terms. See prior discussion of Saylor, and exchange margin lending terms.
Thus, unless you are a quant with an algorithmic trading bot based on thoroughly backtested probability models, and ring-fenced with stop-losses, options (need to be an expert in the Black-Scholes formula), and so forth, JUST SAY NO TO MARGIN. Jay, you indicated somewhere earlier that not everybody loses money with margin. I said that it is insane to take margin-account loan terms "for almost any purpose". I did not fit into that tiny little "almost"!
My apologies for the very delayed reply. I have been jumping from one emergency to another, while still sleep-deprived. I do not wish to be rude to the people who spent pieces of their limited lifetimes trying to advise me on how to save my BTC.
It will take some time to catch up for real here. Following are a few general notes.
Heater, you were right. In retrospect, it came to pass that your advice, which I rejected, could have saved me significant BTC. Thank you for your time and thoughtfulness. Unfortunately, as I told Jay somewhere, I am not an "economically rational actor" about Bitcoin.
How much so? Even now, although of course I regret not heeding your advice - on some deeper level, I do not regret it at all. If I did, and it turned out to be unnecessary, then I think that my brain would shut down and refuse to function.
Now, I can still tell myself that I have never, ever voluntarily sold BTC for dollars (other than ordinary spending). That has a non-economic, intangible value to me, in the sense that this is horrible, but I can live with it.
JayJuanGee, due to the above note to Heater, you can say "I told you so" doubly. Thank you for the multiple posts with long, detailed analysis. Unfortunately, it is now mostly irrelevant except for when I can conduct a very thorough postmortem of all the horrendous mistakes that I have made here. It is not a waste; I will learn something from your posts.
You are almost dead right that I was gambling. The problem is that I didn’t plan to, and it didn’t start that way. Having been trapped for months in this situation with no clean exit (= exit without selling any BTC), I think that I learned my lesson long ago - but only after it was too late to tell myself, "Don't do that!" In a sense, I sold that BTC months ago - in the moment that I leveraged it.
Now that I have some available margin again, I could try to grab back some shreds of lost BTC. If I had mindrusted my BTC for cash, that would be the correct option. But I only have margin; and it is now not too late to tell myself, "Don't do that!"
I said "almost", because gambling would have been much more fun. At least, it has an entertaining thrill. From this experience, I have had much misery, and no thrill. On the other hand, I did learn a lot while struggling to figure out a nonexistent clean exit. Gambling lacks that feature. Knowledge is valuable - more valuable than a thrill. Therefore, although this was gruesomely not-fun, I derived more benefit from this than from gambling.
My new liquidation price on remaining BTC is still over $25k. However, my debt is now so much lower that I may be able to extract the remaining BTC by selling other assets. Maybe. Everything is down, and I have negligible dollar reserves (something like $30) after I already poured everything into that BTC account. I need to see if there is any sensible, non-foot-shooting way to get BTC where it belongs again: On-chain, in my wallet, really mine in the "not your keys, not your coins" sense.
But it needs to be all-or-nothing: If I fail to get it out, then I may have lost all of my other assets - and my BTC would still be at risk. If I sacrifice my other assets, then my risk tolerance will be zero - not even a liquidation price of $1, but "this all needs to be on-chain right now". And I cannot take out only a piece, because that reduces collateral on the remaining debt: The remaining piece will be at high risk of liquidation. If I mess this up now, in the worst case, I could be left with literally no money or other liquid assets at all - nothing, zero, impoverished - flat broke.
For someone who did something terrifically stupid to get into this mess, I think I am actually not so stupid. After all, as I pleaded before, I was temporarily insane, not stupid. I can figure this part out, after I take the time for serious number-crunching. If I cannot get it all out at once, then I may simply nudge the liquidation price far enough under $25k to survive the wick in a test of $25k - and hope we have solid support at $25k or above. (Preferably far, far above...) In that scenario, I would still have enough "safe" assets to survive if the BTC account gets repeatedly liquidated down to zero. I would need those assets to help me regenerate some BTC; I know what I am doing there, which is why I had any BTC in the first place.
Jay's advice about DCA is sound for most people; indeed, I have passed it on to others before. However, it does not fit my unusual circumstances. In those circumstances, I was reasonably successful for the past few years until the moment that I took debt against BTC. If I had never touched margin, never taken debt against BTC, then I would be doing great now. I would not even be upset about the market - to the contrary! I was fine in 2018-2019, when my BTC was in my wallet where it belongs, and I found good opportunities to increase my BTC holdings. Much of what I just lost, I first acquired in 2018 when there was blood in the streets.
Jay, this experience with margin has ruined years of my patient effort. I had financial success - not riches, nowhere near real riches, but "this is finally beginning to look pretty good". Then, I rapidly ruined it with a few little errors in judgment. Even if I can salvage my remaining BTC, it may take me a long time to rebuild.
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