In one week, the price of the Celsius token (CEL) has experienced a dizzying ascent. A particularly strange phenomenon since the exchange behind this token is on the verge of bankruptcy. Should we see it as a type phenomenon pump and dump ?
Celsius, the price of crypto is exploding
On Twitter, an account drew the attention of the crypto community to the recent surge in the price of CEL. He compared this situation to that of the video game distributor GameStop (GME). Which was narrowly saved by the coordinated strength of its shareholders, especially small investors.
At the time, retailers, aware of the company’s liquidity problems, pushed the GME share price to the highest. To do this, they repurchased a large number of shares and short-term option contracts. Since then, despite significant fluctuations, the shares have never returned to their pre-crisis level.
It may therefore be that, faced with a similar situation, CEL holders have decided to take a similar path. Over the past seven days, the price of Bitcoin has risen from $1.83 to as much as $4. There is no doubt that the short squeeze of the token is in progress. In other words, traders who have sold short are inclined to quickly buy back their positions. Which stimulates the skyrocketing prices.
The link between the two events seems more or less obvious. However, some shadows are drawn on the board in the case of Celsius. First of all, there is very little liquidity available. This is explained by the fact that most of the funds are blocked in the wallets of the exchange. Secondly, the fate of the token remains uncertain, with moreover a high probability of significant failure.
That said, it is to be expected that the price of the token will continue to climb to new heights. Indeed, the thousands of customers affected by the decline of Celsius are mobilizing for. The others should follow in a mass movement. On the other hand, in the medium and long term, the forecasts are not so encouraging. The risk of collapse seems significant.
Receive a digest of the news in the world of cryptocurrencies by subscribing to our new daily and weekly newsletter service so you don’t miss anything essential Cointribune!
I came to blockchain out of curiosity and I stayed there out of passion. I was amazed by the possibilities it offers through its various use cases. With my pen, I hope to help democratize this technology and show how it can help make the world a better place.