I mussed the image.  Image tag added (and edited into the below quote).  Today is not a good day for me!  Someone, please quote me again - oh, thanks, it's already done.


I want to make one thing deadly clear:

I was NOT margin-trading BTC.  If I were doing that, I would now be in high profit because I would have sold at $48k (and maybe shorted it).

A few months ago, I bought on margin between $35k and $43k.  Some things went wrong, with complications from other transactions; leverage wound up higher than planned, but still at what seemed a "safe" level.  Then, I held through $48k because I do not want to sell any BTC, ever.

I was one of the idiots trying to increase LTH BTC by leveraging BTC to buy more BTC in the dip, then slowly repaying the margin loan from other income.  (Plus doing some of that "borrow against your BTC!" stuff for other purposes; this is the succinct version.)

That's similar to what Saylor does.  Why shouldn't I do it?  Oh, yes, because Saylor has access to lending terms that are not insane.

Exchange margin accounts make loans on the worst possible terms:  If the fuzzy-notional price of an oracle (not even the real market order-book price) dips even one microdollar below exactly $x for even one microsecond, then a robot instantly trashes your collateral.  Sells down, market-dumps - with liquidation penalty.

You get no "margin call", as in a traditional margin account.  (Or as Saylor would receive, if BTC crashes low enough.)  If you have other assets elsewhere, you get no opportunity to decide how best to limit your own overall losses.  If you have other assets elsewhere, they are not considered when calculating your account's risk of default.  And BTC is sufficiently volatile that there is no "safe" level.

...And there is no accounting for the fact that a fluctuation bottoming out slightly below your liquidation price may last only hours, minutes, or even seconds.  At 00:00 UTC today, my liquidation price level was about $29,975.  Seems safe, yes?  Well, there was a time when it seemed safe.  "If Bitcoin stays over $30k, I am ok."

The oracle only priced BTC below $30k for a brief time, sometime between 00:00 and 01:00 UTC.  In that time, I market-dumped several chunks adding up to 0.5 BTC.  When I hit the dread SELL button the first time, I saw my health meter flash as low as 0.01%... yes, I cut it that close; and I am damn lucky.

With no time to think, no time to make calculations, no time to set limits, I just kept shaving down as the price oracle kept dropping.  I was running away, as the "official" price chased me down towards the mid-$29k range.

Then, suddenly, the oracle was back over $30k; and my last sale was the absolute lowest actual sale today on this exchange.  I personally cut through the book, and made the very bottom of the wick!  It was all over in minutes.

If I had not caught it - if I had not sold anything - then a robot would have dumped much more out of my account.  (And done it all at once - probably cutting through the order book as low as $29k or even lower, due to how market maker bots arrange their orders during times of high volatility.)  My total losses would have been catastrophic.  By market-dumping 0.5 BTC at the bottom, I saved (multiple-times 0.5) BTC.

I have other money and assets that I may have preferred to lose, in preference to selling BTC so low.  But there was no time for that.

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The problem is not borrowing money to buy BTC.  (Is it a problem for Saylor?)  The problem is borrowing money on the worst possible terms.  Positively malicious terms.

For most other types of loans, a borrower's default is not in the lender's best interest.  Collecting on defaulted accounts is lossy, and high-overhead.  Therefore, even the harsher parts of the lending terms tend to be tempered by the lender's desire not to need to deal with delinquent or defaulted accounts.  Most lenders seek to minimize defaults.

The entities offering cryptocurrency margin accounts have a perverse incentive to stack the loan terms to maximize borrower defaults.  Want to buy BTC at a discount?  Set up an exchange, offer margin accounts, wait for the dip, and then stockpile BTC in cascading liquidations!

The whole cryptocurrency margin ecosystem has the incentives of loan-sharking.  Those incentives are exploited in full accord with the ethics of people who also profit from pump-and-dump Ponzi-coins.

You need to be either stupid or crazy to take a loan on these terms, for almost any purpose.  To avoid accusations of deficient IQ tantamount to mental retardation, I plead a bout of temporary insanity.  Do I know better than to do this?  Yes, I do.  Why did I do it - why, why, why!?  I have asked myself that many times, after I got in too deeply to get out fast without drastic losses.  Chalk it up to temptation, starting with a little bit of something really safe ("lol, I can survive a crash even to $10k!"), then one thing leading to another as the account spins out of control.

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Gun, knife, or poison... suggestions?  Self-immolation sounds cool hot.

Or perhaps, I should be happy that I kept most of my BTC (for now), and simply work on extracting it from this debt trap.  Don't expect prompt replies.  I am busy with that.