Alright, in case you’re wondering whether I was margin called, let me clarify: Nu am fost.
For the uninitiated, Binance the largest cryptocurrency exchange offers a few kinds of margin trades. Primarily, there’s a marginea transversală where you can transfer multiple cryptocurrency coins and share the margin loan across them. And then there’s an isolated margin. This one is restricted to one trading pair.
I transferred all my coins into cross margin because it reduces the chances of liquidation. Observing the sentiments around me, with people fearing a Bitcoin retreat to $25K, I started shorting the coin — at 35K.
Soon it dropped to $33K and below. Being ecstatic about the idea of accumulating more Bitcoin assets as it goes lower I shorted more — in other words, borrowed and sold them for cash. In another world though, I saw Etherum and alt-coins getting dumped even harder than BTC and decided to go long on them — borrow more coins.
If you’re a veteran at margin trading, you’d know how my trade’s endgame will pan out. But, if you’re a noob like me, then hear me out.
In a cross-margin, when you short sell a coin, the exchanges first sell your available balance before letting you borrow more on margin. I didn’t know this at that time.
Worse, when I longed the altcoins, I consumed the margin cash I’d received from the Bitcoin short. So, when the price plunged down to $31K, I had no USDT cash in my margin account to buy back the BTC assets.
With most exchanges in my country halting bank deposits in recent times, the only thing I could’ve done is either long Bitcoin at its $31K price (with a potential risk of it going further down and causing liquidation scenarios) or let it pass.
I chose the latter and in doing so lost all my Bitcoins. Today, the price is back above 38K, with my short and long positions still open.
Though it’s not as dark and gloomy as it might seem. In a way, I just accidentally sold off my Bitcoins and rotated that cash into the altcoins. And I learned a valuable lesson to not long and short randomly together. However, this came at the cost of losing my BTC assets, the biggest and most secure digital currency.
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