Despite the bankruptcy of Celsius, the price of its token explodes by more than 6000%

The price of the celsius cryptocurrency has increased by 6000% in the space of two months.

Despite the bankruptcy of cryptocurrency lending company Celsius, its celsius token (cel) is in very strong shape. The cryptocurrency’s price rose 6,300% in the space of two months, from $0.07 in June to $4.65 on Monday, according to data from Tradingview. The price of the token has been falling for a few hours, trading at 10:30 a.m. on Tuesday morning around 2.7 dollars.

The token’s price hit the level it was at just before its users halted withdrawals, which signaled the company’s early liquidity issues amid market turbulence. This is a rather incredible phenomenon, but which also affects, as we know, the shares of bankrupt companies which continue to trade.

There is a whole speculative game that causes effects of this kind, especially in a deregulated market such as that of cryptocurrencies. As a reminder, withdrawals and transfers from customers of the Celsisus platform were stopped on June 12. On the other hand, at no time were transactions on its token stopped.

Short squeezes

Learning of the fund’s difficulties, its lack of liquidity and its probable filing for bankruptcy protection, a large number of investors positioned themselves in short sales, through options, on the token.

But since mid-June, the price of its token has not stopped climbing. Options triggering liquidation threshold effects force positioned investors to buy back their position at any price for margin call reasons, which is called a “short squeeze”. Again, this is a traditional finance process that even digital assets are no exception to.

Bottom line: Cryptocurrency is up over 6000% in two months, and it may not be over. There is also the hope that Celsius assets will be resold for scrap at a fair price: this includes technology, infrastructure, and quite a few of those tokens that have regained a lot of value.

Ripple and Goldman Sachs among others are known to be watching Celsius assets closely. However, investing in this kind of token is all the more risky as Celsius is very far from out of the woods: the company has a hole of 1.2 billion dollars in its reserves, according to data. she has provided herself since filing for bankruptcy.

As a reminder, Celsius was one of the main cryptocurrency lending/staking platforms, which consists of lending its cryptocurrencies on a blockchain against interest. The company offered interest rates over 18% for savers, but only 0.1% for borrowers.

It has plunged its 1.7 million customers, spread across more than 100 countries, into the uncertainty of one day recovering their funds.

Antoine Larigaudrie, edited by PA

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