In the crypto world, greed is often the most expensive tuition fee.

I have a friend who, at the end of 2022, bought Bitcoin with 100,000 RMB as a bottom-fishing move, with an entry cost of $17,000. By March 2024, when Bitcoin soared to $73,000, his account had grown to 430,000. I advised him to take some profits, but he simply wouldn’t listen—he insisted on waiting until Bitcoin hit $100,000 before acting.

The market didn’t indulge him. In August, Bitcoin retraced to $49,000, and his account instantly shrank to 290,000. Seeing such a big loss, do you think he learned his lesson? No. In November, Bitcoin unexpectedly broke through $100,000, and his account peaked at 590,000. And then? He changed his tune again, now waiting for $150,000. During this wait, Bitcoin retraced to $91,000, and his account shrank back to 530,000. The profits that could have been safely secured were simply eroded by greed.

What’s the biggest problem with this guy? Full position. This is the most common fatal mistake among retail investors in the crypto space—frankly, it’s not much different from gambling.

What does full position mean? It means putting all your assets into the market with no buffer. It looks aggressive, but in reality, it pushes you into a corner. According to data, this all-in strategy can have a maximum drawdown of -54%, with a success rate so low it’s almost unbearable. Compare that to how professional institutions operate—even if they claim to be "full position," they usually keep a significant portion of cash on hand to cope with sudden volatility, never trapping themselves completely.

Where is the most terrifying part of full position? It completely cuts off your ability to respond to market fluctuations. Once there’s an unexpected market move, you can’t reduce your position to save yourself, nor can you adjust your holdings to lower your risk exposure. Ironically, neuroscience research has long confirmed that—when a person is in a full-position state—activity in the prefrontal cortex drops by 17%. In other words, your rational thinking ability is severely weakened. The more money and risk you have, the more you’re pushed into irrationality.