Celsius Network is bankrupt, so why is CEL price up 4,000% in two months?


Crypto lending platform Celsius Network has an roughly $1.2 billion hole in its steadiness sheet, with most liabilities owed to its customers. As well as, the agency has filed for chapter safety, so its future appears bleak.

Nonetheless, Celsius Community’s native utility token CEL has soared in valuation by over 4,100% within the final two months, reaching round $3.93 on Aug. 13 in comparison with its mid-June backside of $0.093.

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As compared, prime cash Bitcoin (BTC) and Ether (ETH) rallied 40% and 130% in the identical interval.

CEL/USD each day value chart. Supply: TradingView

Takeover rumors behind CEL explosion?

Technically, the value rally made CEL an excessively valued token in early August when its relative energy index (RSI) crossed above the 70 threshold.

Takeover rumors look like behind CEL’s upside energy. Notably, Ripple needs to buy Celsius Community’s belongings, in line with an nameless supply cited by Reuters on Aug. 10.

CEL’s value greater than doubled after the piece of reports hit the wire.

In July, rumors additionally surfaced about Goldman Sachs’ intention to acquire Celsius Community for $2 billion. CEL was altering arms for as little as $0.39 round that point.

CEL value quick squeeze

A military of retail merchants additionally seems to be behind the CEL’s big upside push within the final two months.

Some merchants have organized a short squeeze to restrict CEL’s draw back prospects. A brief squeeze is when an asset’s value rises immediately, forcing quick sellers to purchase again the asset at a better value to shut their positions.

It’s potential to create a brief squeeze due to CEL’s decreasing circulating provide, primarily because of the freeze on Celsius Network’s token transfers.

Apparently, FTX had about 5.1 million CEL tokens on Aug. 13, roughly 90% of all the whole circulation throughout exchanges. In the meantime, the quantity of open quick positions on the trade was round 2.66 million CEL versus the month-to-month excessive of two.96 million CEL on Aug. 11.

FTX sport quick. Supply: Legacy Synthesis

In different phrases, quick merchants have closed about 300,000 CEL positions in simply two days.

What’s subsequent for Celsius toke?

Quick squeezes are arduous to maintain over an extended interval, historical past shows.

Such prospects put CEL at dangers of going through excessive correction within the coming weeks or months. As mentioned, the token is already overbought, which additional provides as much as the draw back outlook. 

CEL/USD three-day value chart. Supply: TradingView

Drawing a Fibonacci retracement graph from $6.5-swing excessive to $0.39-swing low churns out interim help and resistance ranges for CEL. Notably, the token now eyes a breakout above its 0.618 Fib line (~$4.21), with its upside goal at $5.25, up 45% from as we speak’s value.

Associated: Crypto markets bounced and sentiment improved, but retail has yet to FOMO

Conversely, a break under the help degree on the 0.5 Fib line (~$3.48) dangers crashing CEL towards $2.75, down 25% from the present value degree.

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