For several days, the Celsius platform has been threatened with insolvency. As a result, the price of its CEL token had fallen by more than 70%. And yet, it has unexpectedly rebounded and is printing a whopping 1600% over the last week. What happened?
The price of the CEL explodes in 1 week
It’s hard to miss this news. For a few weeks now, several experts have been pointing the finger at the fact that Celsius might be in an insolvent position with respect to its users. The cause is a bad management of its clients’ assets and too risky strategies.
A few days after the beginning of the turmoil, Celsius announced the suspension of withdrawals, transfers and swaps of cryptocurrencies on its platform. As a result, the CEL token had collapsed by more than 75% following the announcement, from $0.365 to less than $0.09.
However, for no apparent reason, the token experienced a meteoric and exceptional rise. Indeed, the CEL reached a new local high of around $1.59 as of June 21. In other words, a rebound of over 1600% in the space of a week since the announcement.
As a reminder, Celsius was accused of mismanaging its clients’ assets. Indeed, the platform would have used the funds of its users as collateral to borrow with leverage and generate even more returns. Except that these positions were threatened with liquidation, until the intervention of Celsius and a re-collateralization.
But what actually happened?
It seems that the sudden rise of the price is the result of an initiative coordinated by the Celsius community. It probably started with a tweet published by Plan C, a well-known market analyst on the social network. Indeed, Plan C explained that a certain group would reward with 20 million dollars the one who would bring the proof of a coordinated attack.
Very quickly, the announcement caused a frenzy on Twitter. Many accounts put the hashtag #CelShortSqueeze in their description or in their nickname, reflecting their intention to target investors who had bet on the fall of the CEL price.
The hashtag remained at the top of the trending list in the US on the social network Twitter for several hours. As a result, users who are used to daily trading saw an opportunity and flocked to the asset, driving it up.
As a result, those who wanted to bet on CEL’s decline (by borrowing stablecoin for CEL and then selling it immediately) found themselves having to buy back to cover themselves. Thus, they themselves contributed to pushing the price up.
It is for all these reasons that the “short squeeze” proved successful for the community, leading to a meteoric rise in the CEL. Of course, this event is reminiscent of what happened to GameStop in January 2021.
