Celsius Community is bankrupt, so why is CEL value up 4,000% in two months?


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Crypto lending platform Celsius Community 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 seems to be 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.

As compared, high 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 power index (RSI) crossed above the 70 thresholds.

Takeover rumors look like behind CEL’s upside power. Notably, Ripple desires to buy Celsius Community’s property, in accordance to 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 amass Celsius Community for $2 billion. CEL was altering arms for as little as $0.39 round that point.

CEL value brief squeeze

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

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

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

Curiously, 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 brief 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 brief. Supply: Legacy Synthesis

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

What’s subsequent for Celsius toke?

Quick squeezes are laborious to maintain over an extended interval, historical past reveals.

Such prospects put CEL at dangers of going through excessive correction within the coming weeks or months. As stated, 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 $6.50-swing excessive to $0.39-swing low churns out interim assist and resistance ranges for CEL. Notably, the token now eyes a breakout above its 0.618 Fib line at round $4.21, with its upside goal at $5.25, up 45% from the value on August 13.

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Conversely, a break under the assist degree on the 0.5 Fib line at round $3.48 dangers crashing CEL towards $2.75, down 25% from the present value degree.

The views and opinions expressed listed here are solely these of the writer and don’t essentially replicate the views of Cointelegraph.com. Each funding and buying and selling transfer entails threat, you need to conduct your individual analysis when making a call.