CEL token suddenly grew x26 times while the holding company Celsius filed for bankruptcy

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2022-08-16 02:56:40

Despite the dire situation of the host company Celsius, the project’s native token suddenly increased x26 times in just the last 2 months.

CEL token of Celsius lending platform suddenly grew suddenly

Cryptocurrency lending platform Celsius Network is saddled with $1.2 billion in unpaid debt. Most of them are damages for users. The company has also filed for bankruptcy protection, so the future of this lending project is not very positive.

However, Celsius Network’s CEL native utility token value has grown by more than 2500% over the past 2 months, peaking at $4.5 on Aug. 15 from a mid-June low of $0.17. 24-hour trading volume remains high at $65.5 million, total market capitalization of CEL ticking $779 million

CEL token price movement in the last 3 months

Technically, the rally made CEL the dominant value token in early August when its relative strength index (RSI) crossed 70.

Takeover rumors seem to have boosted CEL’s bullish strength. Notably, the rumor that Ripple is considering buying the asset of Celsius Network is also a big catalyst for investors to put their faith in this token. The news was made by Reuters when it was reported that Ripple is interested in Celsius’ assets but there has been no confirmation from either company yet.

In July, there were also rumors that Goldman Sachs was planning to acquire Celsius Network for $2 billion.

The army of retail traders also seems to have contributed to CEL’s sudden growth spurt. Some traders have performed a short squeeze to limit the prospect of a CEL price drop. A short squeeze occurs when the price of an asset rises suddenly, forcing the short seller to buy back the asset at a higher price in order to close the position.

A short squeeze is possible at the moment as the circulating supply of CEL decreases, mainly because Celsius Network has frozen token transfers. Interestingly, FTX had about 5.1 million CEL tokens as of August 13, approximately 90% of the total circulating on exchanges. Meanwhile, the number of open short positions on the exchange is around 2.66 million compared to the monthly high of 2.96 million CEL on Aug.
In other words, Short traders closed positions around 300,000 CEL in just 2 days.

History shows that a short squeeze is hard to sustain for a long time. Such scenarios put the CEL at risk of facing a serious correction in the coming weeks or months. With that said, the token is overbought, further increasing the downside risk.

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