On the third day after the LUNA crash, Lao Chen posted a screenshot in the group: account balance 0.03 USDT. The day before, he was still shouting, 'What's there to fear about UST de-pegging? Do Kwon can save it,' and at this moment, he could only say, 'I mortgaged my house.' That night, 17 people in my phone received similar messages, three of whom directly canceled their exchange accounts — the terror in the crypto world is never 'a 30% drop,' but rather 'it was worth 1 million yesterday, and today it's not even enough to buy a cup of coffee.'
Those who have experienced that bloody incident understand what 'the market doesn't make sense' means. Looking back at the review, what made us collapse was never the rise and fall itself, but the ignorance of 'extreme risks.'
1. The 48 hours of the LUNA crash: from 1 million to zero, more absurd than a movie.
Lao Chen's operations are a 'template for retail investor bankruptcy,' each step is on a knife's edge:
Day one: When it dropped 30%, he leveraged 5 times.
On the evening of May 10, LUNA dropped from 80 USDT to 56 USDT, and UST de-pegged to 0.9 USD. Lao Chen patted his chest in the group: 'This is just a wash, I opened a 5x long position with 500,000 USDT, aiming for 100 USDT.' He didn't look at the on-chain data — the redemption amount of UST had already exceeded three times the reserves; this was not a pullback but the beginning of a systemic collapse.
On the second day: when it dropped 99%, he went all in to buy the dip.
On the morning of May 11, LUNA dropped to 0.5 USDT, and Lao Chen's account was liquidated with only 200,000 USDT left. He surprisingly bought 200,000 coins: 'After a 99% drop, where else can it drop to? 1 USDT rising to 10 USDT is a 10x!' But he didn't know that once the death spiral of algorithmic stablecoins starts, there is no 'bottom' — for every 1% de-pegging of UST, more LUNA will be destroyed, the more it is destroyed, the more it drops, and the more it drops, the more it is destroyed.
On the third day: before it went to zero, he was still waiting for a rebound.
In the early hours of May 12, LUNA dropped to 0.0001 USDT, and exchanges began to delist. Lao Chen's 200,000 USDT turned into a string of numbers as he stared at the screen muttering to himself, 'Just wait a bit; it will bounce back.' Until 6 AM, the K-line chart turned into a straight line, and he collapsed in his chair — 1.2 million USDT (including his mortgaged house) evaporated in 48 hours, leaving him without even enough to pay his child's tuition.
This is not an isolated case. That day I counted the losses in the group: 17 people lost a total of 8.9 million USDT, of which 12 used leverage, 9 tried to buy the dip during the 'drop process,' and 7 dumped all their money into a single coin of LUNA.
2. The 'deadly dimension' of the crypto world: it is fundamentally different from your understanding of 'risk.'
After experiencing the LUNA incident, I truly understood: the volatility in the crypto world is terrifying because it breaks through the traditional market's 'risk ceiling.'
1. 7x24 hours without rest: even sleeping is risky.
The A-share market has closing times, the US stock market has circuit breakers, but a crash in the crypto world can happen while you're bathing, in a meeting, or even in your sleep. The most brutal wave after the LUNA crash happened precisely at 3 AM Beijing time — when most retail investors were fast asleep, their accounts were being cleared. Later, Lao Chen scolded himself: 'If there had been a pause button, I could have at least saved 300,000.'
2. A meat grinder without a 'limit down' mechanism.
Traditional markets have a 10% fluctuation limit, giving you a buffer opportunity. But in the crypto world, a 'halving' can happen in just 10 minutes:
In 2022, during the FTX collapse, SOL dropped from 25 USDT to 5 USDT in 4 hours;
During the May 19 incident in 2021, BTC dropped from 40,000 USDT to 30,000 USDT in just 30 minutes;
Not to mention those altcoins, where a 90% drop is common.
3. Leverage is a magnifier, but also a death knell.
When Lao Chen used 5 times leverage, he thought, 'a 20% drop would cause liquidation, it's very safe.' But he forgot: a 20% daily fluctuation is too common in the crypto world. That wave of LUNA dropped from 56 USDT to 5 USDT, a 91% drop, and even a 1x leverage couldn't withstand it; a 5x leverage liquidation only requires a 17% drop — leverage in the crypto world is not a tool, but poison for gamblers.
4. The 'freedom to go to zero' of altcoins.
LUNA's market value once ranked 7th globally, considered a 'mainstream coin,' but it dropped to zero in an instant. Not to mention those altcoins without real support, where teams run away, there are code vulnerabilities, and regulatory crackdowns; any small issue can make them disappear. I've seen the worst-case scenario for retail investors, who bought a 'metaverse concept coin,' and the team tweeted in the early morning saying 'we're done,' and by morning, the coin price was 0.
3. The three iron rules to survive: I avoided three waves of going to zero with these.
After the LUNA crash, I deleted all altcoins, reshuffled my account, and established three rules. Later, I avoided crises from FTX, Three Arrows Capital, and others three times.
1. The position in a single coin must not exceed 20%, and leverage should never be touched.
Now my portfolio is always '4321': 40% BTC, 30% ETH, 20% SOL, 10% USDT. Even if a coin drops 50%, the total account will only lose at most 10%, with enough room to bounce back. Leverage? Don't even think about it — making 10 times leverage 10 times, one liquidation will go to zero.
2. Clear all 'risk positions' before sleeping.
Every night before 11 PM, I will close all short-term trades for that day and only keep long-term positions. That night of the LUNA crash, if Lao Chen could have cleared his position and slept, he could have saved at least 700,000 USDT. The early morning in the crypto world is 'devil's time,' and the main players love to crash the market at this time; the deeper retail investors sleep, the worse they lose.
3. When you see 'everyone is shouting to buy the dip,' run.
When LUNA dropped to 10 USDT, the community was full of slogans like 'historical bottom' and 'Do Kwon will surely win.' This is actually the most dangerous signal — when retail investors unanimously feel bullish, it's the moment for the main players to harvest. At that time, although I also held LUNA, I cleared it when it dropped to 50 USDT for a simple reason: 'When everyone thinks it's fine, that's when it’s most problematic.'
4. A piece of honest advice for those still in the crypto world:
You never know when a 'black swan' will come, but you can choose to 'make yourself resilient.' Lao Chen has now rebuilt 50,000 USDT, only buying BTC and ETH, adding to positions every time it drops more than 10% and selling a bit when it rises more than 20%. He said, 'Before, I thought about how much to earn; now I think, 'if it crashes again, how much can I still have left?'
The ups and downs in the crypto world can indeed 'scare people to death,' but what kills you is not the market, but your underestimation of risk:
Thinking 'after a 99% drop, it won't drop anymore' is ignorance;
Using a house as collateral to trade cryptocurrencies is madness;
Putting all your money into one coin is gambling with your life.
When the next extreme market comes, I hope you can smile and say: 'Fortunately, I was prepared early.' Instead of watching an account going to zero like Lao Chen, without even the strength to cry.
Remember: the profits in the crypto world are earned, and you can only obtain them by 'surviving.'
One person staring at the K-line guessing support levels is not as good as the team marking key points in advance; on the edge of liquidation, biting the bullet and holding on is not as good as someone saying 'just close half of the position first.' The hardship of fighting alone doesn't need to become a habit.
We explore the direction, we control the risks, you just need to follow the rhythm. I've always been here, waiting for you to set sail together. If you lack execution, consider following @bit多多 and learn operations with Duoduo.
