A classic story—Luna's collapse.

Imagine you hold 10,000 Luna tokens, which were worth 1 million USD yesterday. After waking up this morning, they’re now worth 700,000 USD. You think to yourself: I've been in crypto for so long, what’s a 30% correction? UST only de-pegged by 10%, I trust the project team, so I go back to sleep.

The next day, you wake up to find your account only has 10,000 USD. At this point, you start to do the math—you’ve already lost 99%, so it should be bottoming out, right? As long as it rebounds to 10 USD, that’s a tenfold gain. The idea sounds great, so you sell everything and gather 200,000 USD, then buy another 200,000 Luna in one go.

Then you can’t sleep at all. You watch helplessly as the price drops from 1 USD to 0.1 USD, then 0.01 USD, and finally gets delisted at 0.000001 USD. Over three days, your 1.2 million USD assets turn into the price of a breakfast.

Why is the crypto market so crazy?

First, this isn’t the stock market—trading runs 24/7 without breaks, and there are no daily limit restrictions to protect you. Second, the entry barrier is extremely low; anyone can play. Plus, leverage trading is wildly abused, with over 20% daily volatility happening every year. The key is that altcoins have no boundaries when it comes to rises and falls.

Together, these three factors—overnight wealth and overnight liquidation—make it possible. Especially leverage—you might think 5x is conservative? But the market experiences over 20% volatility days every year. Add leverage, and the falls accelerate, leading to chain reactions of liquidations.

I’ve been in crypto for over 10 years, starting with 8,000 yuan, reaching a net worth of millions, then owing 8 million in debt. Now I’m back to a few thousand. This tuition fee has given me a profound understanding: using leverage cautiously is really not just talk.