Howell's Lesson: Why Beginners in Crypto Need to Avoid Leverage

The case of James Howells, the Welsh engineer who saw 8,000 BTC disappear in a landfill, gained new attention after the British court ended his 12-year legal battle. But this time, Howells is not asking for help to recover lost coins—he is warning the community about even more dangerous traps.

The Brutal Reality of Leverage in the Volatile Market

The main message is clear: new traders who adopt high leverage face a brutal fate. According to Howells, over 90% of them are quickly liquidated. Bitcoin’s volatility does not forgive those operating with tight margins. A 5% move in the market can wipe out weeks of accumulated gains or even consume the entire initial capital.

Leverage turns small fluctuations into catastrophic losses. Beginner traders often underestimate this risk, especially during market upswings, when overconfidence invites larger positions.

Asset Protection: The 3-2-1 Strategy in Focus

More important than trading for profit is preserving what you have. Howells emphasized the ‘3-2-1’ backup strategy as essential: keeping three copies of private keys, in two different formats, with one copy stored offline.

This simple approach prevents traumas like his. A lost private key is irreversible; a liquidated capital, in theory, can be reconstructed. Proper management of digital assets begins with fundamental security.

Concerns About Regulated Products and Autonomy

Howells also raised questions about the future of Bitcoin in the face of regulated products. These instruments, although bringing stability and institutional access, may dilute the decentralized control that defines cryptocurrency. The more the industry integrates into the traditional financial system, the less individual autonomy remains for investors.

The warning is twofold: not only be careful with leverage but also pay attention to the type of intermediary chosen to operate.