HomeCryptoCelsius Network is bankrupt, so why is CEL price up 4,000% in two...

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

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

Compared, high cash Bitcoin (BTC) and Ether (ETH) rallied 40% and 130% in the identical interval.

CEL/USD each day worth chart. Supply: TradingView

Takeover rumors behind CEL explosion?

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

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

CEL’s worth 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 worth quick 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 worth rises out of the blue, forcing quick sellers to purchase again the asset at a better worth to shut their positions.

It’s attainable to create a brief squeeze due to CEL’s reducing circulating provide, primarily as a result of freeze on Celsius Community’s token transfers.

Curiously, FTX had about 5.1 million CEL tokens on Aug. 13, roughly 90% of all the overall circulation throughout exchanges. In the meantime, the quantity of open quick positions on the change 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 exhausting to maintain over a protracted interval, historical past reveals.

Such prospects put CEL at dangers of dealing with 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 worth 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 at the moment’s worth.

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

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 includes threat, it is best to conduct your individual analysis when making a call.