Machi Big Brother, a former entertainer and tech entrepreneur, is now a crypto whale. He staged an astonishing wealth rollercoaster ride on the Hyperliquid exchange.
With his aggressive leverage strategy, he once pushed his account to nearly $60 million (with a floating profit of over $44 million).
However, driven by the "gambler's fallacy" and the "disposition effect," he ignored market reversals, frantically added to his position, and stubbornly held on, attempting to defy mathematical laws.
Ultimately, within 47 days, he plummeted from his peak to a mere $1,718, losing all his initial investment, vividly and cruelly illustrating the end of the "gambler's bankruptcy theorem."
To understand this defeat, you need to know three concepts: random walk, absorbing wall, and negative drift.
① Random walk
Imagine a drunkard walking in a straight line. He tosses a coin; heads he moves forward (makes money), tails he moves backward (loses money).
Machi Big Brother's experience is essentially like that of a drunkard. In the short term, he might continuously throw up positive stocks, sprinting forward and seeing his assets skyrocket to 60 million. But this doesn't mean he's incredibly talented; it's just luck.
② Absorbing wall
The road the drunkard was walking on was asymmetrical on both sides.
On the left is the high wall (the house/market): composed of the total funds in the market. For an individual, it is almost infinitely far. You cannot win all the money in the market and make it "bankrupt".
The cliff on the right (you): This is where your capital will drop to zero. For Machi Big Brother, this point is finite.
As long as the game continues, the drunkard has a chance to keep moving backward. Once he hits the cliff (his assets reach zero), he falls off. Falling off means being "absorbed"—game over, and you have no chance to recover.
Because the competition (market) is infinite, while you are finite, given enough time, you will 100% fall off the cliff.
This is the "gambler's bankruptcy theorem".
③ Negative drift
If it were just a coin toss (50% chance of winning), the drunkard might fall for a long time. But in casinos and crypto contracts, there are fees and slippage, like a strong wind blowing at the edge of a cliff, constantly pushing the drunkard towards the cliff. This is negative drift.
Under negative drift, the expected value is negative. Machi Big Brother paid hundreds of thousands of US dollars in funding fees alone in this round.
So, why didn't he stop when his account had a floating profit of $44.84 million on September 18th? Why did he lose all his principal? The reasons are as follows:
a. Leverage. Leverage can pull a seemingly distant "cliff" right in front of you—a mere 4% reverse fluctuation (25x leverage) is enough to cause a fall.
b. Martingale Strategy. Using limited "ammunition" to continuously add to positions (doubling down) to fight against an endless market decline will inevitably lead to a broken capital chain and crashing into the absorption wall.
c. Mental accounting. Why didn't he stop taking profits when he made a fortune? Because in a gambler's mind, that 44 million was "the casino's money," and losing it wouldn't be a big loss.
Machi Big Brother said, "Just be happy." This is the carefree attitude of a rich gambler; ordinary people shouldn't try to emulate it.
Here are three algorithms for life:
I. Participating in "Positive Expectations"
Contracts and gambling are games of negative expectation; avoid them unless you're willing to pay for excitement.
Invest in "serious" index funds through regular investment, hold high-quality assets with an EV greater than 0, and be a friend of time.
Duan Yongping said that ordinary people can make money by bidding on the 500 standard, because the market is "positive drift".
Second, stay away from "absorption walls".
Staying alive is the first priority. Stay away from leverage, and don't let volatility push you off a cliff.
III. Setting a "Stop Line"
Speculators must realize profits and cut losses. Otherwise, according to the gambler's bankruptcy theorem, the outcome is zero.
Value investors, on the other hand, should use spare cash that they can afford to lose to wait for the positive drift.
