Crypto mistakes Coinfessions

Crypto Horror Stories: Traders Share Coinfessions of Their Losses

5 min read

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Everyone makes mistakes, but those in crypto are arguably the most painful. It’s all on you and there’s nobody to call when your investments go to zero or you lose access to your stash. 

Crypto investors are all too familiar with the feeling. When the market is on the up, you feel like a genius, you can’t put a foot wrong. But when things turn for the worse, you can get terribly exposed, and it hurts. 

Coinfessions, where crypto mistakes live 

Twitter account Coinfessions documents rookie crypto mistakes and dodgy antics from folks playing in the crypto ecosystem. 

The eye-watering stories are a sight to behold, from making secret investments behind a partner’s back to blatant scams (known in the industry as rug-pulls), the common thread throughout appears to be one of fear and greed. 

Fortunately, you can learn from others’ mistakes. Here are seven crypto mistakes, maybe even horror stories, that you can learn from. Worst case, they’re cautionary tales about what not to do. 

Aping into NFTs

In a submission to Coinfessions, one investor confessed, “My son convinced me to buy into Bored Ape Yacht Club at $400,000, when I was saving for our second home. Since then I have lost my job, the apes are down $100,000, and I have started gambling the last of my fortune to recover the money.”

Adding further, he wrapped up on a sombre note saying, “I can’t sell because my son got a licensing agreement with a weed agreement. I am stuck with this dumb monkey image.”

While 2021 was the year for NFTs, last year saw the valuations of most collections plummet precipitously along with the broader crypto market. Looking forward, it’s not clear whether an NFT bull market is on the horizon or if most collections are past their sell-by date. Either way, it hasn’t worked out for this investor. 

Bored Ape Yacht Club #8315. Source: OpenSea

Crypto loans 

In another tale, one investor told Coinfessions:

“Borrowed $20k from a friend in Dec ‘21 and bought sh*tcoins. Crypto tanked, then I lost my job in Feb and told her I couldn’t afford to pay her back as agreed and she just have to trust I’ll get it eventually. She lost the plot, called me a **** and we haven’t spoken since. That 20k is now worth $700 and I’m down a friend, but she wore the loss.”

Borrowing money from friends is rarely a good idea. Borrowing cash from friends to invest in crypto is a recipe for disaster. 

The only thing worse than losing money on crypto with borrowed money is losing a friend in the process. If you absolutely must borrow to invest in crypto — which almost everyone would advise against — just don’t borrow from friends.   

Trading a pension away

Most would agree that crypto is further out on the risk spectrum and it is probably not the best investment to go “all-in” on for your retirement. 

Sadly, one unfortunate investor didn’t get the memo, as he shared his tale of greed with Coinfessions. 

Source: Coinfessions

One of the oldest pieces of investment advice is not to put all your eggs in one basket. Aside from failing to do that, this investor made the classic error of chasing his losses by using leverage.

Leverage amplifies both gains and losses. In this case, it ultimately resulted in the household savings going to nought. Unfortunately, it provides yet another piece of evidence of how dangerous leveraged trading can be — even the professionals get wiped out regularly, what chance do ordinary people have? 

Don’t give up your day job

It’s the classic crypto mistake, we’re all geniuses in the bull run. NGU (number go up) is a powerful force that activates the greed that lurks deep within us all. 

In a rather sad story, one investor told Coinfessions:

“I was making a lot of money at my full-time job, so I invested most of it at the top of the bull market and lost all of it. I started studying the markets and got a taste of the full potential crypto has, so quit my job and invested thousands of dollars in futures and lost everything. Now I have zero money saved, no job, just taking loans, and trying to somehow make it. At this point I really don’t know what to do. Feel like completely giving up.”

If you happen to enter the market at the right time as your investments shoot up, it can be tempting to think you’re a smart investor. Being a full-time trader sounds glamorous and all, not to mention highly profitable. 

However the reality is around 90% of traders fail. In case you’re tempted to jump ship and dive full-time into crypto, you may want to ask yourself whether you’re likely to be in the 10% that succeeds.  

Crypto Mistakes: The importance of trusted companies 

It’s well known how Sam-Bankman Fried’s exchange FTX completely imploded as it emerged that he traded away over US$10 billion in user assets. 

Over a million users worldwide have been impacted as their funds were locked on FTX at the time of its bankruptcy. Part of the motivation behind leaving their crypto on FTX was the promise of a return, a cunning tactic to persuade users not to hold their own crypto, but instead trust FTX. 

Of course, this turned out to be a crypto mistake for the ages, as this investor shared with Coinfessions.  

Source: Coinfessions

Crypto is a fascinating space, and certainly not for the faint of heart. 

Crypto mistakes burn because in most cases, there is nobody to call to get your money back or to complain if you make an error. Nobody likes to lose money and in the realm of crypto, there’s no shortage of horror stories. 

In the end, the best one can do is educate and inform yourself of all the risks and benefits before diving in headfirst. That’s not to say that you’ll be immune to crypto mistakes, but it’ll certainly reduce the prospects of being wiped out.