---
id: "action-avoid-crypto-leverage"
type: "action-item"
source_timestamps: ["28:30:00", "30:15:00"]
tags: ["risk-management", "trading"]
related: ["framework-liquidation-cascade", "concept-leveraged-perpetuals"]
speakers: ["Joe Carlasare"]
action: "Purchase spot Bitcoin only and avoid using leverage or margin trading."
outcome: "Avoidance of forced liquidations and total capital loss during flash crashes."
sources: ["carlasare"]
sourceVaultSlug: "cardone-carlasare-bitcoin-macro-2026Jun25"
originDay: 3
---
# Avoid Leveraged Crypto Trading

## Action

**Strictly avoid** leveraged or margin trading of cryptocurrency, especially perpetual contracts on offshore exchanges like [[entity-bybit|Bybit]]. Buy and hold **spot Bitcoin only**.

## Expected Outcome

Avoidance of forced liquidations and total capital loss during the routine flash crashes described in [[framework-liquidation-cascade]].

## Reasoning Chain

1. Bitcoin's price action is structurally volatile because of [[concept-leveraged-perpetuals|leveraged perpetual contracts]].
2. Routine, mechanical [[framework-liquidation-cascade|liquidation cascades]] periodically wipe out leveraged positions.
3. [[contrarian-crashes-are-leverage-flushes|These crashes are leverage flushes, not fundamental failures]] — but they still wipe out leveraged traders regardless of fundamentals.
4. The spot holder is unaffected by these mechanical events.
5. Therefore: use no leverage.

## Supporting Evidence (from enrichment)

- Numerous exchange and market reports document **large-scale retail losses** from high-leverage crypto trading.
- Regulators (ESMA, FCA, CFTC) have warned about, capped, or outright banned high-leverage retail crypto derivatives in many jurisdictions.
- This is one of the **least-contested** pieces of advice in the entire conversation.

## Required Knowledge

See prerequisite: [[prereq-margin-and-leverage]].


## Related across days
- [[framework-liquidation-cascade]]
- [[action-avoid-paper-btc]]
- [[action-self-custody]]