The Dangers of Leverage
Yesterday the market cleansed itself. Nineteen billion dollars in open positions were liquidated in one day. Bitcoin fell hard. Ethereum followed. But the altcoin market was destroyed. Some names dropped seventy percent in hours. This wasn’t about fundamentals. It was the unwinding of greed. Markets fall when conviction is borrowed.
When the market is calm, leverage feels smart. Borrowing feels like strategy. You think you’re maximizing efficiency, but you’re really building a trap. Then volatility returns. One sharp move triggers a cascade. Prices drop, margin calls hit, collateral gets sold automatically. Stop losses fail. Exchanges freeze. What looked stable becomes chaos in minutes.
Many learned this the hard way. They took loans against their crypto to extract liquidity. They called it capital optimization. But when their collateral fell, the exchange took everything. Their assets were never really theirs. This is how the market humbles people.
Borrowing doesn’t make you smarter. It makes you fragile. Leverage amplifies both success and destruction. When it turns, emotion takes over. Real investors don’t borrow. They build. They buy what they can afford and hold through volatility. They aren’t shaken by short-term noise. Leverage makes you a slave to price. Ownership makes you free.
Events like this feel like collapse, but they are cleansing. Excess risk is washed out. Fake conviction disappears. Those who owned their assets outright survive. Those who borrowed lose what they never really had. This is how markets reset. This is where strong hands are made. While others panic, disciplined investors accumulate. The transfer of wealth happens quietly, from leveraged traders to patient builders.
Conviction is not recklessness. It is focus with discipline. Diversification protects the average. Concentration builds the exceptional. But concentration only works when you control your exposure. If you borrow to hold, the exchange owns you. If you hold with cash, you own your freedom. The strongest portfolios are simple. They are built on time and patience, not leverage or noise.
After every purge comes silence. Liquidity dries up. Sentiment disappears. And that is when real opportunity forms. This is when the patient build. They don’t chase rebounds. They accumulate while others recover from fear. Every bull market begins in that silence. Every long-term fortune is born from chaos. Yesterday was not destruction. It was renewal. The speculative layer burned away, leaving space for truth.
The market always exposes weakness. It targets impatience and ego. It rewards endurance. Conviction cannot be borrowed. You either have it or you don’t. The strongest investors are not those who guess right. They are those who stay solvent when others are wiped out. Yesterday proved it again. Leverage was punished. Discipline was rewarded. Ownership endures. Everything else gets liquidated.
