I Got Liquidated. So What?
In the recent crypto bloodbath, my crypto portfolio was one of those that got wiped out by liquidation. I had over $20K in DeFi with $15K in loans. I was at roughly 60% LTV.
But, the price of CRO started dropping along with the crypto market. I was teetering on liquidation until Crypto.com decided that they would modify their interest rates to "make their business sustainable". CRO dumped immediately, causing me to get liquidated.
All I have left is about $3K in crypto and almost $2K in loan.
You would imagine that I might be a bit salty about the experience. But, it's actually a bit of a relief. The liquidation wiped away $13K of debt.
You might say that I should be upset about losing $20K. It was actually closer to $30K at one point. But, most of it was unrealized gains. I guarantee you that I did not save anywhere near to $30K. I didn't save anywhere near $20K. What got liquidated was mostly capital gains. Despite the market dump, I got liquidated at a profit.
Best of all, I borrowed when the crypto was at a high price and got liquidated at a lower price. Thus, my capital gains aren't as high as they could have been.
Another reason I am comfortable with my DeFi collateral getting liquidated is that crypto prices are cheap at the moment. If I was able to build my portfolio to $20K once, then I could do it again, especially at these prices.
Buying cheap crypto and selling at a profit? I could do this all day, every day. I don't feel like being liquidated was a loss. I got $15K out of it. And, I still have change left over.
Yeah, sure. There is a tax consequence to this. But, you only pay taxes if you make money. And, that's what's great about this. I made money.
And, with this market dump, talk about being blessed with another opportunity.
Now, the tough part is dividing my savings between HBD and other cryptos to start rebuilding my portfolio.
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During the last 5 years, I got liquidated multiple times. The most brutal was when bitcoin broke down 6k mark.
I bought at 5700$ with some leverage. And left the trade open, thinking I will come back at it after a year or so.
I got liquidated around 3800, and it turned around from 3300 something to 10k, then 20k, then 60k.
That trade still haunts me. Lost more than 70% of my new money that I put into crypto. And all the unrealised gains I could have made with that trade, had I not leverage traded it.
After that point, I stopped leverage trading, mostly I passive invest now.
Bad thing is I don't make a lot of crazy gains.
Good thing is I sleep well.
The whole crypto world is bleeding and I barely notice it. Maybe worth the peace of mind.
Anyways, you are right. You always bounce back from losses, if you learn from them.
I am sure you will make a lot more than 20k$ in the future. Crypto is just the university of hard knocks, teaching one hard financial lesson at a time.
Good luck rebuilding your portfolio🙂
You know I looked at the trading thing, tired it and it just did not click with me, I prefer the stacking up and earn passively and like you I careless about the crypto market at the moment and if there is anything I worry about now, it is buying the dip
Posted Using LeoFinance Beta
Same here. I'm not an active trader.
Yeah rather play a league one can handle
Posted using LeoFinance Mobile
Most of this was not from trading, at least not intentionally. It was mostly savings. I don't have the patience for trading. I think, if I was liquidated for leveraging, I might be a bit more sour. My loan went towards paying down other debt at higher interest. So, I feel I got something out of it.
But, you're right. I feel I can repeat this for much more. It would be silly to just give up. I have proof that it can be done. Why stop?
Good that you see the dump work somehow in favor of you, these things require some financial IQ, we learn almost everyday when it comes to crypto.
Posted Using LeoFinance Beta
In this case, my crypto loans were for 3%, which I used to pay off other debt at 18% or higher. So, despite the loss, I am better off financially when you balance it out. I think my optimism is likely because of the financial IQ.
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Good that you see it for how it was… positive thinking helps too.
It is quite an experienced…
Posted Using LeoFinance Beta
It was not an ideal experience. But, I think I'm better off.
I understand… 🤓
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I actually feel bad upvoting a post about losing money, it's been a rough ride for most of us lately. I do like that you're still positive though. Too many people aren't. I'm like that too, just keep building, we'll get better seats on the next bus.
Posted Using LeoFinance Beta
That's a good phrase. I'm going to steal it.
I'm positive because I was thinking about how long it would take to pay back the loans. Getting wiped out, I don't have to worry about that. I think, if I lost the money and had nothing to show, I might be more salty.
my brain still struggles with the idea of using debt as a financial tool...just kind of grates on my senses. Irony, I'm going to pull the band-aid and jump on the crypto-debt band wagon when the #leofinance team releases collateralized lending on the #polycub platform.
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Well, if it helps, every dollar represents debt. Each dollar bill is a note backed by the full faith and credit of the government.
Banks will lend out money for a house mortgage. Then, they'll turn around and sell the note.
Bonds are debt. That debt gets bought and sold.
In my case, I wasn't expecting to be liquidated. But, the difference between my debt and the debt above is that I had something to pay the debt. I already had the "money".
On the other hand, the government backs their debt by printing more money to pay it. All the money in the bank, or in your pocket, is government debt.
Mortgages use the house as collateral. But, they rely on the homeowner to make payments on the note with money they might earn over many years.
Bonds are debt. But, they are also collateral.
And, when it comes down to it, crypto is just a ledger entry on the blockchain that you are owed X number of satoshis. You don't actually have satoshis in your pocket. You can trade that debt for items. Or, you can convert collateralize your debt to borrow.
When you borrow $1, you are agreeing to buy $1 with $1.x dollars.
It's just as crazy as matter being energy. It fries a person's noodle.
ha, i never got over the time a buddy explained to me that everything is really just tiny vibrating strings