This year during Tet, some relatives asked me what a account burn is, and honestly I just wanted to avoid the topic because it’s too painful. But the more I try to dodge, the more people keep asking, especially a persistent brother who keeps chasing after me, so I have to explain clearly.

Actually, what is an account burn? It’s simple, it’s related to how you trade. If you just buy Bitcoin directly, with 10,000 yuan, then buy 10,000 yuan worth of Bitcoin, when Bitcoin goes up 10%, you make a 1,000 yuan profit; if it drops 10%, you lose 1,000 yuan. This kind of trading is similar to buying stocks; you cannot burn your account to zero.

But when you enter into a contract with leverage, it’s a different story. I have 10,000 yuan but the platform lends me 90,000 yuan with 9x leverage, so my total capital becomes 100,000 yuan. If Bitcoin increases by 10%, I make a 10,000 yuan profit instead of 1,000 yuan, ten times more! Sounds exciting, right? But if Bitcoin drops 10%, I lose 10,000 yuan, which is equal to my initial actual capital.

What is an account burn in essence? It’s when your losses reach your actual capital, and the platform is forced to liquidate all your positions, recover the borrowed money, and your actual capital drops to zero. That’s an account burn.

Why do trading platforms lend money? Because they earn trading fees from larger volumes, and they have no risk since they automatically liquidate when you incur losses. So leverage is a double-edged sword; it can multiply profits tenfold, but it can also multiply losses tenfold.

Looking at the current market, those following Trump, or new narratives, buying contracts with high leverage, then getting their accounts burned—what is that? Just a costly lesson. You can’t blame the market or Trump; you have to blame yourself for not understanding the risks. That’s why I don’t dare tell my family I’m stuck, because it’s too hurtful.