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

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Crypto lending system Celsius Network has an somewhere around $1.2 billion hole in its balance sheet, with most liabilities owed to its customers. In addition, the agency has filed for bankruptcy defense, so its upcoming seems bleak.

Nonetheless, Celsius Network’s native utility token CEL has soared in valuation by in excess of 4,100% in the final two months, reaching all-around $3.93 on Aug. 13 in comparison to its mid-June base of $.093.

In comparison, top rated coins Bitcoin (BTC) and Ether (ETH) rallied 40% and 130% in the very same time period.

CEL/USD daily selling price chart. Resource: TradingView

Takeover rumors powering CEL explosion?

Technically, the value rally designed CEL an excessively valued token in early August when its relative power index (RSI) crossed previously mentioned the 70 threshold.

Takeover rumors surface to be at the rear of CEL’s upside energy. Notably, Ripple wants to purchase Celsius Network’s assets, according to an anonymous supply cited by Reuters on Aug. 10.

CEL’s cost much more than doubled after the piece of information strike the wire.

In July, rumors also surfaced about Goldman Sachs’ intention to purchase Celsius Community for $2 billion. CEL was shifting arms for as lower as $.39 all around that time.

CEL selling price quick squeeze

An army of retail traders also appears to be powering the CEL’s huge upside press in the past two months.

Some traders have organized a brief squeeze to limit CEL’s downside prospects. A brief squeeze is when an asset’s price tag rises quickly, forcing brief sellers to invest in back the asset at a increased rate to near their positions.

It is achievable to build a brief squeeze for the reason that of CEL’s lowering circulating provide, principally due to the freeze on Celsius Network’s token transfers.

Apparently, FTX had about 5.1 million CEL tokens on Aug. 13, about 90% of all the whole circulation across exchanges. In the meantime, the sum of open small positions on the exchange was all-around 2.66 million CEL as opposed to the regular large of 2.96 million CEL on Aug. 11.

FTX sport shorter. Resource: Legacy Synthesis

In other words, limited traders have shut about 300,000 CEL positions in just two times.

What is actually next for Celsius toke?

Short squeezes are difficult to maintain in excess of a prolonged interval, heritage demonstrates.

Such prospective customers put CEL at dangers of struggling with intense correction in the coming months or months. As reported, the token is previously overbought, which further provides up to the draw back outlook. 

CEL/USD 3-day rate chart. Supply: TradingView

Drawing a Fibonacci retracement graph from $6.5-swing substantial to $.39-swing very low churns out interim guidance and resistance levels for CEL. Notably, the token now eyes a breakout above its .618 Fib line (~$4.21), with its upside goal at $5.25, up 45% from modern cost.

Connected: Crypto marketplaces bounced and sentiment enhanced, but retail has yet to FOMO

Conversely, a split beneath the aid degree at the .5 Fib line (~$3.48) threats crashing CEL toward $2.75, down 25% from the recent price tag amount.

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