The Truth About Trading with Leverage: What You Need to Know

In the fast-evolving world of cryptocurrency trading, individual traders often push the boundaries of risk to maximize gains. James Wynn, a pseudonymous crypto trader, has become a prominent figure due to his high-leverage, high-stakes trading strategies—particularly on memecoins and decentralized derivatives platforms. Wynn’s dramatic rise, marked by early success with memecoin investments and later risky leveraged positions, offers important lessons for traders navigating the volatile crypto markets.

James Wynn’s journey in crypto trading exemplifies both the potential for extraordinary gains and the perilous risks of aggressive leverage. Beginning with a small bet on the memecoin PEPE, Wynn’s early investments in 2023 skyrocketed as the token’s market cap soared from under $600,000 to approximately $10 billion by mid-2025. His initial $7,000 stake thus transformed into an estimated $25 million, paving the way for more audacious trades.

Building on this momentum, Wynn incorporated high-leverage positions on decentralized derivatives platforms such as Hyperliquid. His strategy included opening long Bitcoin positions with up to 40x leverage, holding substantial notional values that occasionally showed unrealized gains of tens of millions. His transparent and sizable positions made him a well-known figure in crypto-trading circles—both admired for his boldness and criticized for risking everything.

James Wynn’s early PEPE trade and initial profits

By early 2025, Wynn was widely recognized within trading communities after turning aggressive bets into large positions that generated tens of millions in unrealized profits. His early investment in PEPE, made when the coin’s value was tiny, paid off spectacularly as the token’s market cap ballooned from under $600,000 to around $10 billion. This turn of events turned Wynn’s initial $7,000 stake into an estimated $25 million.

Wynn’s aggressive leverage trades extended beyond memecoins; he amassed $3 million in positions that soon ballooned to over $100 million. In May 2025, Wynn held a 5,520 Bitcoin position—using 40x leverage—that at its peak, reflected unrealized gains approaching $39 million.

Despite the boldness, Wynn realized gains along the way. He sold parts of his holdings while in profit, demonstrating an understanding of risk mitigation, although some critics argued he was too aggressive in chasing ever-larger returns.

Wynn’s losses and what went wrong

The crypto market turned sharply in late May 2025 when Bitcoin’s price tumbled below $105,000. This decline triggered a cascade of liquidations, resulting in nearly $100 million in losses for Wynn’s leveraged Bitcoin position, which had a notional value above $1.25 billion.

Further liquidations followed, including partial closures as volatility intensified. Wynn risked nearly $100 million in a second leverage bet, publicly sharing his liquidation levels amid mounting criticism. On June 5, 2025, Wynn was partially liquidated three times within an hour, losing roughly $39 million in Bitcoin holdings.

His exposure to volatile assets like memecoins and leveraged positions magnified small market moves, contributing to rapid capital erosion. In August 2025, Wynn suffered a $22,627 loss on a 10x leveraged Dogecoin position, which he linked to coordinated market actions against memecoins.

His high-leverage approach—adding more on losing trades—exacerbated losses, illustrating how emotional trading and overconfidence can amplify risks in the crypto space.

Lessons from Wynn’s trading saga

Wynn’s volatile career underscores critical principles for crypto traders: leverage can dramatically amplify gains but equally escalate losses. High leverage demands rigorous risk management and disciplined exits to prevent wipeouts during sudden market swings.

Leverage is a double-edged sword

While it offers the chance for exponential returns, excessive leverage leaves little margin for error in the highly volatile crypto markets, emphasizing the importance of timing and position sizing.

Partial liquidation risk and capital erosion

Repeated partial liquidations erode margin buffers, often truncating profitable trades and fueling the cycle of losses—highlighting the need for strategic capital management during volatile swings.

The significance of exit strategies and profit-taking

Wynn’s experience demonstrates that booking profits and having clear exit strategies can mitigate risks, especially when market conditions turn against leveraged positions.

Platform and technical risks

Leverage platforms like Hyperliquid provide essential speed and transparency but carry risks such as slippage, funding costs, and liquidation pressures—factors every trader must carefully consider.

This article was originally published as The Truth About Trading with Leverage: What You Need to Know on Crypto Breaking News – your trusted source for crypto news, Bitcoin news, and blockchain updates.