If you have spent more than fifteen minutes on Crypto Twitter, you have seen the siren song of the “infinite money glitch.” It usually involves some complex-sounding strategy involving “looping,” “leverage,” or “delta-neutral yields” that promises to turn your modest stack into a sovereign wealth fund. But here is the cold, hard truth that most influencers won’t tell you: borrowing money to buy Bitcoin is quite possibly the most effective way to ruin your life. It is not “galaxy brain” investing; it is, as Wolfgang Münchau recently put it, downright stupid.
I have sat through enough liquidation cascades—from the 2017 ICO bust to the 2022 FTX crater—to know that the market has a nasty habit of hunting down every single over-leveraged long position until the “support levels” look like Swiss cheese. The technology behind crypto might be 21st-century wizardry, but the human greed driving these leverage cycles is as old as the 1929 stock market crash. We are just putting a shiny DeFi wrapper on ancient financial sins.
The ‘Looping’ Delusion: Subprime Mortgages in a Hoodie
The industry loves to invent new terminology to make old risks sound like “innovation.” Take “looping,” for example. In the DeFi world, you take an asset—say, Ethereum—deposit it as collateral, borrow a stablecoin against it, and then use that stablecoin to buy more Ethereum. You rinse and repeat until your exposure is five or ten times your original capital. The protocols make it easy, the UI is slick, and the yields look mouth-watering when the price is moving up.
But strip away the smart contracts and the “yield farmer” aesthetic, and you are looking at the exact same mechanism that blew up the global economy in 2008. Back then, it was subprime mortgages. A homeowner would see their house value rise, take out a home equity loan against that paper gain, and use the cash as a down payment for a second house with a teaser-rate mortgage. It worked brilliantly—right up until the moment house prices stopped going up. In crypto, the “teaser rate” is the low interest you pay on a decentralized lending platform, and the “house” is a volatile digital asset that can drop 30% in a Sunday afternoon. When the collateral value dips, the smart contract doesn’t care about your “long-term conviction.” It simply liquidates you.
The Boomer Wisdom That Actually Matters
Crypto enthusiasts often dismiss “boomer finance” as a relic of a dying era, but some rules of gravity are universal. Financial activity, at its core, consists of three things: lending, investing, and insurance. Most “innovations” throughout history have simply been clever ways to reduce the friction of these activities or, more dangerously, ways to hide the risk associated with them.
Münchau, who covered the 1987 stock market crash as a young journalist, correctly identifies that the craze for asset-backed securities back then was viewed with the same awe we now reserve for Layer 2 scaling solutions or liquid restaking tokens. Securitization broke large, clunky loans into flexible securities. It was “innovation,” sure, but it was ultimately just repackaging. When you repackage trash, you still have trash—it just smells a bit better for the first few months. The same applies to many “yield-bearing” tokens today. If you don’t know where the yield is coming from, you are the yield.
Fraud on a Generational Scale
We often act as if the crypto world is uniquely prone to bad actors, but we are just the latest stage for a very old play. The collapse of Terraform Labs and the subsequent 15-year sentence handed to Do Kwon was described by a judge as “fraud on an epic, generational scale.” And it was. Terra/Luna was a $40 billion wipeout that ruined lives across the globe.
But even that pales in comparison to the “champions” of the old-school finance world. Bernie Madoff’s $64 billion Ponzi scheme remains the gold standard for financial sociopathy. The lesson here isn’t that crypto is more dangerous than fiat; it’s that human nature remains constant. Every new financial frontier offers new ways to cheat others and, more commonly, new ways to cheat yourself. Using borrowed money to bet on an imaginary “support level” isn’t a strategy; it’s a hallucination. There is no support level in a panic, only the cold logic of the order book.
Why Traditional Models Fail Bitcoin
One area where the “boomer” economists get it wrong is trying to value Bitcoin using their old toolkits. You cannot run a time-series model to predict Bitcoin’s price. You can’t use Artificial Intelligence to forecast next year’s valuation because AI relies on historical data to predict a future that, in crypto’s case, is fundamentally different from the past. When someone tells you Bitcoin is going to $1.5 million or dropping to $10,000, they are throwing darts in a dark room.
Traditional finance thrives on assessing earnings potential and demand. But Bitcoin doesn’t have earnings. The only way to value it is through its core functions:
- As a transaction currency (where it has largely underperformed its original whitepaper goals).
- As a hedge against the debasement of fiat currency.
The latter is the real play. Bitcoin is effectively a bet against the centralized banking system and the dollar’s dominance. This is where the macro-economic consensus fails to grasp the asset. They see a volatile ticker symbol; we see an insurance policy against a global monetary system that is printing its way into oblivion.
A Senior Editor’s Reality Check
The real innovation in crypto is genuine. Tokenization—breaking big claims into small, tradable ones—is a massive leap forward. Decentralized finance *could* cut out the rent-extracting middlemen of Wall Street, though there is a high risk it simply replaces them with a new oligopoly of developers and whales. But none of that innovation matters if you are wiped out because you decided to play with house money.
If you want to survive the next cycle, you need to understand the difference between the technology and the casino. The technology is revolutionary. The casino is a trap.
- Don’t trade on margin: If you can’t afford to see the asset drop 50% overnight, you have no business owning it with leverage.
- Ignore the ‘Support’ Myth: TA (Technical Analysis) works until it doesn’t. In a liquidity crunch, charts are meaningless.
- Understand the Hedge: If you’re buying BTC, you are betting against the fiat system. That is a macro play, not a “get rich quick” scheme.
The “Don’t Know” answer is the only honest one when it comes to short-term price action. Anyone telling you otherwise is likely looking for an exit liquidity provider. Don’t let it be you.
