Podcast Notes| KOL Miles: Five major lessons I learned in crypto investment after losing $1.7 million

Without experiencing a heavy blow from the market, it is impossible to truly grow into a good investor.

Compiled and compiled: Deep Trend TechFlow

Podcast source: Miles Deutscher

Original title: How I Lost $1.7 Million In Crypto (I F*cked Up)

Broadcast date: February 17, 2025

background information

In this video, I will share the top five mistakes I have made in my cryptocurrency trading career and the valuable lessons I have learned from these mistakes. At the same time, I will analyze common pitfalls for both novice and veteran traders in the crypto market and explore why these mistakes, while costly, have ultimately helped me succeed. I hope that through my sharing, you can avoid similar problems and become a better cryptocurrency trader or investor.

key issues discussed

• Bitcoin (BTC)

• Shanzhai (Altcoin)

• Shanzhai market dynamics

• The latest updates on the shanzhai market

• Shanzhai trading strategy

• Projects involved include: BEAM, MODE, AI16Z, LKY, LUNA, LMT, SUNDOG, PEPE

introduced

Miles：

In the crypto world, most people like to talk about their success. They are happy to show off the huge gains they have made in the market, but few are willing to disclose their failures.

But in fact, I have a lot of experienceSuccess largely stems from the lessons I learned from those major losses。Even in the current market cycle, I have experienced a number of failures, and these experiences once again remind me of some core principles to be a successful investor.

Today, I want to change my perspective and not talk about my five success stories, but focus on the significant losses I have suffered in my encryption career. These losses represent the biggest mistake I have ever made, and they also made me realize the pits I have stepped into repeatedly in the market. The reason why I have become a profitable investor is largely due to the devastating period of 2021. Even in the current cycle, I have failed to achieve a few transactions, but it is these failures that will allow me to be more calm in the future market cycle, especially in the next round of fake bull market.

Ignore market risk signals

Miles：

I must talk about Luna from the biggest loss I suffered in the cryptocurrency market.This experience made me realize deeply“positionsThe importance of bias as an investment psychological issue.The so-called position bias means that when you hold a large position in an asset and see its price rising, it is easy to have a subjective belief that the fundamentals of the asset are improving. However, this belief is often not based on objective fundamental analysis, but rather is simply a delusion caused by rising prices. In other words,You may mistake the increase in prices for proof that fundamentals are improving.

It was this position bias that led me to ignore many potential warning signs that actually suggested that Luna’s fundamentals were gradually failing. I actually realized at the time that while algorithmic stablecoins like UST are valuable because they are scalable and decentralized, unfortunately, this also carries the risk of possible decoupling (i.e., stablecoins cannot maintain value balance with their anchored assets).

Although I was optimistic about Luna at the time and held large amounts of Luna and UST, I also understood that there was a risk of decoupling them. However, I underestimated the actual possibility of this risk and even regarded it as a very small probability event, so I took no action, or did not take timely action.

By the time the price of UST fell to 96 cents, the market had shown clear signs of crisis, and I should have cut at least 50% of my positions immediately to avoid risk. But due to the influence of position bias, I chose to ignore these warning signals. This psychological misunderstanding eventually cost me a heavy price. We all know what happened next. Once UST began to decouple, the value of Luna and UST eventually returned to zero.

This huge loss in 2021 has dealt a serious blow to my portfolio,But it also became an important turning point in my investment career.In fact, I made huge gains through my investment in Bitcoin in early 2021. I bought an entire bitcoin for $5000 in 2019, then increased the investment to $500,000, and further grew to a wealth of more than $1 million in the bull market. However, by 2022, due to the sharp fluctuations in the market, my assets have shrunk from one million dollars to tens of thousands of dollars. This kind of psychological gap from life-changing wealth to greatly shrinking experience is painful.

I firmly believe that without experiencing a heavy blow from the market, it is impossible to truly grow into a good investor. If you are experiencing a similar loss, remember that while you may not be able to see the positive side right now, these experiences will make you stronger and smarter.

Because the lessons contained in these failures are truly valuable. My goal is to help you become a better investor, and learning how to learn from your mistakes is the key to achieving this goal. That’s why I’m successful today because I keep learning from failure.

Lack of clear stop-loss strategies

Miles：

My second mistake was not having a clear stop-loss strategy.I believe this is a common problem for many investors, especially given the volatile shanzhai market.

Let me take Beam as an example. During this cycle, I had a large position on Beam, but unfortunately I did not have an effective stop loss strategy for it. When I checked my portfolio this morning, I found that the value of Beam, which was once one of my largest investments in the market, had shrunk to a few cents.

When I looked back, I found that the price trend of Beam had already sent a warning signal. After the initial high, prices began to enter a series of lower highs and lows, and momentum stagnated significantly. Although technically the price was still above the moving average at the time, when it first broke, it should have alarmed me, but I chose to ignore the signal until the price fell further. Judging from the daily chart, I also had days or even weeks to take action, but I didn’t set a stop loss in time.

For currencies that I hold for a long time, I usually do not set a 100% stop loss, but adjust the stop loss ratio based on the fundamentals of the currency and my investment period. For example, for short-term transactions, I would set a strict stop loss, and for long-term holdings, I might allow a 50% pullback. However, in Beam’s case, I should have cut my position in at least half, because even if I missed the rally, I could have re-entered when the price trend improved.

Therefore, whether it is a short-or long-term trade, setting a stop loss is crucial. You can determine key support and resistance levels based on a high time frame (such as weekly or monthly) as a reference for stopping losses. example,Solana’s key support is currently at $175, and if the price falls below this level, I will start to worry. Similarly, the key support for Bitcoin may be 75K. Even if these levels may not necessarily be hit, setting stop losses in advance can help us take timely action when major market changes.

In order to better execute stop-loss strategies, I suggest combining multiple technical indicators, such as moving averages, relative strength index (RSI), etc., to improve the accuracy of the strategy. When an indicator in a high time frame triggers, you can switch to a low time frame (such as a daily or hourly line) for further analysis of price movements to decide whether to execute a stop loss.

In addition, I would like to share a practical tip, which is to set up price alerts on TradingView. By simply right-clicking on the moving average or key support level and adding alerts, you can receive notification when prices hit key levels and take timely action. This way, you won’t find your assets have fallen sharply after leaving the market for a long time.

Finally, I want to remind everyone that stop-loss strategies are not only technical, but can also be fundamental. For example, Luna’s collapse is a typical case of fundamental failure. When the market shifts from risk appetite to risk aversion, changes in fundamentals can also serve as a basis for stopping losses. Therefore, whether it is technical signals or fundamental changes, we need to remain vigilant and adjust our investment strategies in a timely manner.

This is an example where I did a little better on stop-loss strategies, let me take MODE as an example. At first, my operation was very successful. I bought it in the Discord community for $0.014, which later went up to $0.06.

At that time, its price trend showed a clear upward trend. From a technical perspective, market conditions are favorable as long as this trend remains. However, the situation changed after the trend was broken. When prices fall below the trend line and moving average, both signals signal that market momentum is shifting. These signals should have attracted my attention, but I was too optimistic at the time that it might be just a false breakthrough, so I didn’t take immediate action.

However, in the next few days, the price trend deteriorated further. The market experienced a series of backtests, and prices failed to break through key support and resistance levels again. Subsequently, the price rebound failed and eventually fell below the previous low. Throughout the process, the market actually issued stop signals as many as 6 times. These signals include a break in the trend line, a break in support levels, and a complete failure of the structure.

Here I adopted a gradual stop loss method. For example, when prices fell below the trend line for the first time, I cut my position by 10%; when support fell, I cut it again by 10%; and when the price structure completely collapsed, I reduced my position further. This step-by-step stop-loss strategy allows me to gradually reduce my risk when the market falls, rather than liquidating a one-time position. The advantage of this approach is that even if the market rebounds, I can still keep some positions and re-enter when the trend returns.

Of course, not all currencies respect the level of support and resistance in technical analysis. In some cases, the market may go straight through these key levels, leaving you unable to respond in time. But in most cases, if the market sends a clear signal of a trend shift, it is always wise to act on a pre-set plan.

I have no objection to people who invest based on long-term fundamentals and do not set stop losses. If your plan is to hold an asset for the long term and be willing to accept the risk of it being zeroed, that is also a strategy.But the key is that you must clearly understand the consequences of this choice. if you decide notSet a stop loss, you must accept the psychological preparation that you may lose all your investment.

I have had similar experiences myself, such as investing in certain memes. At that time, my plan was to either go to zero or skyrocket. Although these currencies were eventually zeroed, I was able to accept the results calmly because I had a clear plan in advance.

No matter what strategy you adopt, the most important thing is to have a clear plan. Even if the plan means I am willing to bear all the losses, it is much better than no plan. Investing without planning often leads to emotional decision-making, which is one of the most dangerous behaviors in investing.

Failure to take profits in time

Miles：

This was probably the most serious mistake I’ve made in years.

Depending on the currency, there will be different price targets. Generally speaking, if I make money on a coin, I try to make money when the price keeps rising. However, there were several times during this cycle that I broke my rules and cost me.

There are two examples. The first one was from November to December last year. I have been promoting on the show that if you make a profit, you have to take the profit. But I didn’t actually do this myself. I was a little addicted to the optimism of the market. Obviously, the market is very hot during this period. The market is very good from November to December. Everyone is excited about the shanzhai season, and many memes are also soaring.And complacency is fatal in the crypto market, so you need to take action when something happens.

When the market goes down, you need to take action, perhaps by stopping or reducing your position, or even choosing to buy. This is also an action you can take. Or when the market is rising, you can increase your stop loss to protect your trade or start profit-taking. But complacency is when you don’t do anything and let things unfold naturally, and you basically just passively watch things unfold.

When I saw portfolio numbers rising, I had a false sense of security that the market would continue to rise. However, when the market began to turn in late December, the bubble burst and the value of my portfolio shrank significantly in a short period of time.

The second example is Lucky Coin, which I traded.I have mentioned this case many times in previous programs and analyzed my mistakes in detail. Lucky Coin was an important investment project for me at the time, but I didn’t make any profit from it. At that time, the value of Lucky Coin I held at my peak was approximately $1.7 million, but due to my failure to take profits in time, all of these gains evaporated.I didn’t make a penny on Lucky Coin.

Of course, there were a number of reasons why I couldn’t withdraw the $1.7 million from Lucky Coin.The first reason is thatWhen making content related to Lucky Coin-related, I follow a personal rule: I will not sell a coin for 24 hours of publicly talking about it. This is to avoid being accused of pushing up shipments, that is, selling immediately after publicly bullish on a currency to make a profit. I believe this practice is morally unacceptable and will undermine my credibility as a content creator. Therefore, I strictly abide by this rule. However, this also caused me to miss out on the opportunity to make a profit at the high point.

In addition, lack of liquidity is also an important reason。Small-cap currencies like Lucky Coin typically have low market liquidity, which means it is difficult to sell large assets at one time without significantly affecting prices. If I tried to sell a $1 million position in one go, it could cause the price to drop significantly, which is obviously not what I would like to see. Therefore, in such circumstances, the sale can only be carried out in batches and may take several weeks to complete.

Despite these limitations, I still believe I made a fundamental mistake in this deal. When I first mentioned Lucky Coin on Discord, it cost about $3; when I first mentioned it on YouTube, it had already gone up to $9. Before that, I had hinted at its potential at $4 to $5, and then the price of Lucky Coin soared to $17. Despite this, I did not profit from it myself.

I was confused by the rapid rise in front of me and mistakenly believed that there was more room for prices to rise, so I failed to follow my own investment rules. According to my rules, when the price of a currency doubles, I should at least withdraw the initial investment to make sure the principal is safe, but this time I didn’t.

Unfortunately, Lucky Coin later encountered problems such as a replay attack and failed blockchain migration, causing its price to fall rapidly. At that time, I obviously couldn’t foresee these technical problems, but this was not an excuse for not making profits in time. No matter what happens in the future, once the price of a currency doubles or even triples, withdrawing the initial investment is a wise choice.

This experience made me deeply realize thatThe importance of making timely profits.When currency prices rise, if you don’t make a profit in time, once the market turns, you will find that many currencies have very limited liquidity. This phenomenon does not only happen in meme. Even large-cap currencies like Beam appear to be illiquid when falling.When prices fall, the market responds very quickly, and if it does not lock in profits when it rises, it may be too late for people to regret.

Through these transactions, I learned to adjust my strategy quickly and avoid the same mistakes in the next major trade. The most critical point is thatMaking mistakes is inevitable, but we must learn from them.Make sure the mistakes you make today will not be repeated in tomorrow’s trade.

When you make a 10x return on a trade, don’t forget the lessons of Luna or other failure cases. When the market price falls and hits your stop loss level, don’t hesitate to stop the loss decisively rather than passively watching the price continue to fall. Looking back on past lessons can often prompt you to take action at critical moments. As painful as these experiences may be, they did help me stay awake during this cycle.

In fact, many times, we need to experience similar lessons many times before we can truly understand the truth. This is like a scientific experiment that requires trial and error and summary, and traders will make unnecessary mistakes in the market. But as we accumulate experience, we can gradually reduce the frequency of errors. The double fault rate for professional players may be only 4%, while for beginners it may be as high as 20%. By the same token, good traders do not make mistakes, but make fewer mistakes and have less impact.

One of the messages I want to convey today is thatMaking mistakes is acceptable, but the key is to learn from them and work hard to reduce similar mistakes in the future.Whether you are a novice or a veteran, making mistakes in the market is inevitable, but every mistake is an opportunity for growth.

Position management errors

Miles：

The fourth mistake isposition management。

During this cycle, I sometimes invest too much money in a certain currency. This excessive position makes me emotional in trading and difficult to make rational decisions. On the contrary, there are times when I am very confident in a certain currency, but I don’t match enough capital investment, resulting in missing out on greater benefits. This made me realize that the importance of position management is often underestimated.

If you can learn anything from my experience, it is that there are three things you must do in investing: set stop losses, take profits promptly, and make reasonable investments.position management。These three points are the key to becoming a good investor.When you are bullish on a currency and the currency has strong fundamentals and technical support, make sure your position is reasonable, but don’t invest too much money to avoid losing control if you lose money.

I share an example, which is my Sundog transaction on October 28. On October 20, I posted a tweet on Twitter stating that I thought Sundog was about to rebound and had therefore established a spot position. As my confidence grew, I added another leveraged position, and as a result, my total position became very large.

At first, the transaction went well, the price rose within a few days, and I made money. However, prices then began to fall sharply. Because I had enough margin in my account, I did not set a stop loss and was not forced out. But when the price fell to 10 cents, I began to feel a lot of pressure. I feel like I should close my position. But I hesitated at the time. I didn’t want to lock in hundreds of thousands of dollars in losses, so I decided to stick to my judgment.

Fortunately, the market then rebounded and the price rose from 14 cents to 26 cents, so I quickly closed my position after returning my share. However, this experience made me deeply aware of the risks and psychological pressures that excessive positions may bring. Even if you are confident in a trade, you cannot invest too much money unless you can fully accept the potential loss.

In investment, the problem of too small positions also deserves attention. If you are confident in a currency but don’t invest enough money accordingly, this may cause you to miss out on potentially significant profit opportunities in the long run.

My recommendation is not to invest more than 5% of your total portfolio in a single currency. If you limit your position to 5%, you can effectively avoid major losses caused by excessive positions. In some special circumstances, if you are very confident in a trade, you can increase your position to 10%, but this should be limited to one or two operations in a cycle.

In addition, as the currency price rises, your position ratio may naturally increase. For example, if you initially put 4% of your money in a currency and its price tripled, that position could account for 12% of your portfolio. In this case, I suggest you take profits in a timely manner. For example, you can reduce your position from 12% to 8%, retain some of your profits, while withdrawing your initial investment and allowing the rest to continue to grow.

For example, I made 100 times more money on Pepe. If I initially invested $20,000 and eventually went up to $2 million, it would obviously account for a larger proportion of my portfolio than the original 1%. butAs prices rise, you need to accept changes in position ratios while controlling risk through profit-taking in batches.

At one stage, Pepe once accounted for a large proportion of my altcoin portfolio. However, I gradually made a profit as it continued to rise, eventually recouped my original investment and realized some profits. Although nominally there is a 100-fold gain between my first buy and the highest price, in reality, I may only make 20 times. This situation is common in the market. Even if you seize 10 times the opportunity, the actual profit may only be 4 times, because you cannot accurately grasp the best time to buy and sell, and you will make profits in batches as you rise.

However, this strategy also has a bright side. If a currency does not reach 10 times, but only rises 5 times and then falls back, you can still achieve 2 or 3 times gains. Although this step-by-step profit-making approach may reduce your potential earnings, it can also effectively protect your investment when the market falls. Overall, it is always wiser to make a profit in a timely manner than not to make a profit.

Holding too much altcoins

Miles：

Next, I want to talk about the last mistake,Holding too many currencies。In 2021, I mainly made this mistake. At the time, I held as many as 30 or more currencies in my portfolio. I remember not only holding Solana, but also investing in many decentralized exchange (Dex) related currencies, I also holding some proxy currencies, some game-related currencies and various L1 projects. As a result, my portfolio expanded to 40 to 50 currencies.

When markets began to turn, managing such a large portfolio became a nightmare. During this cycle, I limit my positions to 20 types. But even so, I still felt like I had too many currencies in November. Although it is not as exaggerated as 40, there are still about 20. In fact, I think 5 to 10 coins is the ideal number.

Over the past few months, I have been trying to compress my portfolio and reduce the number of currencies to a more reasonable range. Almost all adjustments were completed in the most recent month. I didn’t add too many long positions, but focused on optimizing the existing position structure. The only exception is when there is a large-scale market liquidation one week, which I think is a good opportunity to temporarily increase positions and gain some good rebound gains. But overall, my goal is to condense my portfolio into 5 to 10 coins instead of 20 to 30.

If you hold 20 currencies now, it’s not too late to reduce it. 15 may be okay, but to be honest, managing even 15 currencies is difficult. For each currency, you need to set price alerts and stop loss conditions, which are almost impossible to achieve among part-time investors.

In addition, it is not easy to truly build deep confidence in a currency. For example, if you say you are bullish on the gaming industry and hold five game-related currencies, while this is acceptable, it will be much more difficult to establish in-depth technical or product arguments for each currency. There are not many truly high-quality projects in the crypto market. When you look closely at your portfolio, you may find that there are only seven currencies you are really bullish on, and the other five or six are investing just because you are optimistic about certain narratives.

Therefore, my recommendation is to concentrate your portfolio in a small number of high-confidence currencies, rather than spread it across too many currencies. By reducing the number of positions you hold, you can focus more on researching and managing each currency, thereby improving the overall efficiency and return on your investment.

As more and more new tokens are introduced, this issue has become more prominent. The number of altcoins continues to increase and market liquidity is diluted, which leads to greater fluctuations when the prices of all currencies fluctuate, thus increasing the overall investment risk. If you want to reduce risk, reducing the number of currencies you hold is an effective way to do so because it makes it easier to manage risk.

To sum up, I think the following five core mistakes are the most likely mistakes investors make during this cycle:

1. positionsprejudice: Unreasonable obsession with existing investments and ignoring market changes.

2. No invalidation conditions are set: Failure to set clear exit criteria for each investment led to increased losses.

3. Failure to make profits in time: Failure to gradually make profits at high prices and miss the opportunity to lock in profits.

4. position managementmistakes: The funds invested do not match the investment confidence, resulting in psychological stress or insufficient returns.

5. Holding too many currencies: Excessive diversification of investment makes it difficult to concentrate on management and increases overall risks.

concluding remarks

Miles：

As I did in the video, I frankly shared my mistakes, and now it’s your turn. Write down your mistakes and the reasons for them. Once the reason is found, future improvement plans can be listed and implemented strictly. Keep this list in a conspicuous location, such as on your computer desktop or mobile phone, or print it out and post it next to the trading table. Always remind yourself to adhere to these principles when market sentiment is high or low.

To maintain consistency in investing, you first need to recognize the problem.Before solving a problem, you must be clear what the problem is.Review these mistakes one by one, reflect on their root causes, and develop a solution. You may also think of some mistakes that I haven’t mentioned, which may have a major impact on you. Record them, analyze them carefully, and plan improvement steps.

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