Despite Bitcoin’s price remaining relatively steady, derivatives trader James Wynn faced a devastating nine-figure loss.

Wynn recently grabbed headlines by flaunting massive nine-figure Bitcoin positions on HyperLiquid, riding a wave of seemingly unstoppable profits that peaked around $100 million.

However, the highly leveraged nature of crypto derivatives trading caught up with him. Wynn ended up liquidating his entire account after Bitcoin’s price shifted by just a few percentage points.

In a post on X, Wynn reflected on his experience: “I’ve decided to take a break from perpetual trading. It’s been a wild ride — turning roughly $4 million into $100 million and then losing it all, ending with a $17.5 million account loss.”

This story is familiar in crypto circles. In 2021, Alex Wice, a former poker player turned derivatives trader, also suffered a $100 million loss after heavy leveraged bets. Even back in 2017’s BitMEX days, traders like SteveS and TheBoot boasted tens of millions in gains and losses before disappearing from the scene.

The Double-Edged Sword of Crypto Derivatives

Derivatives offer valuable tools for traders. For example, a holder of 500 BTC (about $52 million) can hedge market downturns by shorting futures, avoiding the risks of selling spot assets like slippage or front running.

Institutional players use delta-neutral strategies, such as basis trades on CME futures, which involve simultaneous long and short positions to generate yield through funding rates.

But trouble arises when retail traders, often inexperienced, engage with platforms offering up to 100x leverage. A trader with $5,000 capital might make modest profits on small moves, but at 100x leverage, a 10% price change could mean a $50,000 gain or loss — a fast track to emotional, risky trading.

According to NewTrading data, only 3% of day traders profit, and just 1% maintain consistent gains. The challenge magnifies when position sizes reach hundreds of millions.

When Leverage Becomes a Trap

Wynn’s downfall was partly due to the emotional strain of trading, but mostly because of his enormous positions. He frequently reported partial liquidations and reopening at higher break-even points — classic signs of over-leverage.

His use of up to 40x leverage left little room for error, making him vulnerable to liquidation hunting by savvy competitors.

HyperLiquid offers decent liquidity with millions in market depth within a 1% price range, but it couldn’t handle Wynn’s multi-hundred-million-dollar leveraged positions.

Wynn had banked on a Bitcoin rally at the Las Vegas conference, expecting announcements that would push prices to new highs. Instead, Bitcoin weakened during the event as speeches from figures like Michael Saylor and Ross Ulbricht failed to inspire a price surge.

With little market movement and Wynn’s aggressive betting, his positions were gradually wiped out. One counter-trader reportedly earned $17 million by shorting Wynn’s long positions, per Lookonchain data.

As Wynn’s derivatives chapter closes, he announced plans to “go back to the trenches” and focus on trading meme coins — a return to simpler waters.