The cryptocurrency market is known for its volatility and can be quite unpredictable at times. This is not surprising considering the nature of cryptocurrencies and the market.
It's possible to experience a significant gain of $20,000 in the morning and end up with a loss of -$20,000 by evening. This recently happened to a well-known Twitter crypto trader, whose positions were forcefully liquidated due to the current market conditions.
Perhaps it would be best to start by discussing the recent market crash. A lot has been happening in the crypto market over the past few days, including the aforementioned crash, which resulted in over $1 billion worth of tokens being liquidated.
Even the apex cryptocurrency, Bitcoin, received its own fair share of losses with more than a 9% drop in price. Apparently, there are speculations that the news of Elon Musk's SpaceX selling off their $327 million Bitcoin holdings contributed to the market crash.
Away from this, a popular crypto analytics platform, Lookonchain, revealed the identity of one of the crypto traders liquidated. Furthermore, this crypto trader had tried his luck in the market, hoping to make some profits. It looks like the move backfired, judging from the massive losses he suffered immediately after he entered the market. To make it worse, none of his 14 positions made a profit.
This gloomy experience underscores the importance of following proper trading rules when engaging in the futures market.
Enough of the suspense. How did this happen, and to whom?
What Happened?
According to revelations from Lookonchain, one of the Twitter crypto traders suffered an embarrassing loss in the market. Andrew Kang (Co-Founder of the crypto-focused venture capital firm Mechanism Capital) lost over $430,000 within 24 hours.
Apparently, the trader had entered the market for trading immediately after the recent market crash. But it was a fruitless venture, as it resulted in massive losses.
This trader entered the market on August 18, and some of the assets he traded within that period were Bitcoin (BTC), Ethereum (ETH), and Arbitrum (ARB). However, the method he employed with his trade was quite the risky one.
Before making any trades, it's crucial to implement risk management strategies. Even if you're an expert, going all-in on the crypto market can result in significant losses. This was the situation with Kang, who utilized a 100x leverage in their trade. This risky strategy potentially led to losses that day. Unfortunately, Kang lost all 14 long trade positions due to the market crash and their risky trading method. Utilizing a 100x leverage only worsened the situation.
Reactions
Lookonchain posted on X saying, "Andrew Kang went long $BTC, $ETH, and $ARB after the market crash on Aug 18.
But every long position was liquidated because he used up to 100x leverage.
He was liquidated 14 times in total and lost ~$432K in only 1 day."
Andrew Kang went long $BTC, $ETH, and $ARB after the market crash on Aug 18.
— Lookonchain (@lookonchain) August 21, 2023
But every long position was liquidated because he used up to 100x leverage.
He was liquidated 14 times in total and lost ~$432K in only 1 day. pic.twitter.com/6P9j6SRDK1
The reaction to the news was quite the same. Many Twitter crypto traders also commented on the post, saying that the leverage Kang used in the market was quite a risky one.
Actually, many people view using leverage in cryptocurrency trading as a form of gambling. Given the current market conditions, traders in the crypto industry must exercise caution to prevent incurring substantial financial losses.