The risk of bankruptcy of the crypto lending platform resulted in a 70% drop in the CEL price. Celsius Network’s native cryptocurrency, CEL, soon recovered, making almost 4x since June 19th. The short pressure on the altcoin is being welcomed by the Twitter community for now.
Celsius (CEL) spikes 300% amid GameStop-like ‘short squeeze’
As I mentioned in the cryptokoin.com analysis, Celsius rose from $0.67 on June 19 to $1.59 on June 21. Over the same period, it experienced a 180% rise compared to the altcoin market’s 12.37% rise. In particular, the shares of Twitter crypto analyst PlanC were effective. Planc announced a $20 million reward for anyone who can prove Celsius remained under a coordinated attack. After that, the rally started in the CEL price. This led the crypto lending firm to suspend withdrawals last week.
The announcement sparked a frenzy on Twitter
Meanwhile, many accounts have placed the hashtag #CelShortSqueeze in their Twitter bios. Thus, it reflected their intention to target investors who bet that the CEL would fall.
The hashtag was trending higher on Twitter in the US. Meanwhile, internet queries for the keyword “CEL short squeeze” also reached 100 points between June 12 and June 18, according to data tracked by Google Trends.
The “trend” tag and keyword imply that day traders are buying CELs in bulk, thereby pushing its price upwards.
Therefore, investors who took a “short” position, that is, investors who borrowed and sold the CEL in anticipation of buying at a lower price, had to buy back their shorts at a higher price rather than “close” them. As a result, the so-called “short squeeze” proved successful. Thus, it led to a massive CEL rally.
The push for the altcoin project is reminiscent of the GameStock craze of January 2021
Here, Reddit users organized to take a position against hedge funds. They profited by hurting the short positions of Melvin Capital and other hedge funds. However, they caused companies to lose billions of dollars.
Bankruptcy risks continue
Celsius, which managed over $20 billion in digital assets last year, is now at risk of bankruptcy. This is because it is unable to pay clients extremely high returns (up to 18%) on their cryptocurrency deposits. Celsius had only $12 billion in assets in May, nearly half of what it held at the start of 2022, according to its website. The firm later stopped disclosing its assets under management.
CEL is the native cryptocurrency used in the Celsius ecosystem to earn interest and repay debts. It is currently trading almost 84% below the ATH level of $8 in April 2021. Therefore, it remains under downward pressure.
According to the Fibonacci retracement chart below, CEL/USD retested the range resistance at $1.95 today. Sellers from $1.7 pushed the CEL price back to $1.29.
A successful break above this level will place CEL price at $3.11 as the next target. On the other hand, a pullback could push the price down 73% from today’s price to $0.34, the current range support, according to analyst Yashu Gola.
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