Key Takeaways
- James Wynn’s $100 million wipeout has proven Warren Buffett right again.
- Buffett had called leverage trading a tool of the fools.
- Wynn went from $85 million in profits to $100 million in losses due to high-leverage trades.
The reckless leverage trader James Wynn has proven Warren Buffett’s prophecy on leverage trading, right after wiping out over $100 million from his portfolio in weeks.
Over the past month, Wynn grabbed attention and headlines for his high-leverage, high-margin trades. He also made significant profit initially, only to lose it all in a few days.
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The Multi-Million Wipeout
Wynn made headlines in May for the largest DEX leverage trade order, over a billion dollars, on the DEX platform Hyperliquid.
Now, he is begging his followers for donations to trade and try to win back the millions of dollars he lost over the past week.
Wynn earned $85 million on his early high-leverage trades but lost $12 million in a few days.
The trader lost $100 million in May and saw his positions liquidated in the first week of June, thus mounting his losses in June to over $25 million.
The reckless trader went long on Bitcoin near its all-time high as the crypto market returned from weeks of sideways movement.
However, soon after his long position, the market started to slide further, as the BTC price slipped below $103,000 momentarily.
Although price momentum was not very volatile, the high leverage set the liquidation price at a thin margin, leading to multiple liquidations despite Wynn adding more margin to his position to avoid liquidations.
Wynn was liquidated thrice on June 5, losing over $16 million, as the BTC price slipped below $103,000. He saw over half a dozen liquidations in two weeks, wiping over $100 million from his portfolio.
Wynn’s $100M Blunder Proves Buffet Right.
Wynn went from opening $1 billion 40X leverage positions on Bitcoin just a couple of weeks ago to now using a few hundred dollars in referral rewards to try to earn something back, proving Warren Buffett’s prophecy on leverage trading right.
Buffett, in an interview with CNBC last year, said:
“My partner Charlie says there are only three ways a smart person can go broke: liquor, ladies, and leverage.”
He had also famously said that:
“If you don’t have leverage, you don’t get in trouble. That’s the only way a smart person can go broke. And I’ve always said, ‘If you’re smart, you don’t need it; and if you’re dumb, you shouldn’t use it.”
Crypto leverage trading has become controversial due to the high leverage margins of up to 125X available for most crypto tokens.
MEXC exchange has reportedly proposed a 1000X leverage margin option as well. With high leverage and market volatility, crypto leverage trading becomes risky.
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