Why CEL is rising 4,000% in 2 months?!
Despite the fact that Celsius Network has gone bankrupt, the CEL token continues to rise!
Celsius Network’s balance statement shows a $1.2 billion shortfall, with the majority of its debts owed to its users. Furthermore, the company has filed for bankruptcy, so its future is uncertain.
Nonetheless, Celsius Network’s crypto token CEL has increased in value by over 4,100% in the previous two months, hitting roughly $3.93 on Aug. 13 from a low of $0.093 in mid-June.
In comparison, leading cryptocurrencies Bitcoin (BTC) and Ether (ETH) gained 40% and 130%, respectively, within the same time period.
Here, I’ll go over the two most likely explanations of the recent rise and then briefly discuss what’s next for Celsius!
Takeover Rumors:
Statistically, the price surge turned CEL into an overvalued coin in early August, when its relative strength index (RSI) rise above the 70 levels.
Takeover speculations appear to be driving CEL’s upward momentum. Notably, Ripple wishes to acquire the assets of Celsius Network, according to an unnamed source quoted by Reuters on August 10.
After the news broke, the price of CEL more than doubled.
In July, speculations circulated that Goldman Sachs planned to buy Celsius Network for around $2 billion. Around that time, CEL was trading for as little as $0.39.
CEL Short Squeeze:
An army of traders appears to have also been driving the CEL’s massive upward surge in the previous two months.
To minimize CEL’s negative potential, some traders have formed a short squeeze. A short squeeze occurs when the price of an asset unexpectedly rises, compelling short sellers to purchase back the asset at a higher price in order to complete their positions.
Because of CEL’s decreasing circulating supply, a brief squeeze is feasible, owing mostly to the freeze on Celsius Network token transfers.
Surprisingly, FTX owned around 5.1 million CEL tokens on Aug. 13, accounting for almost 90% of overall exchange circulation. Meanwhile, the number of open short positions on the exchange was around 2.66 million CEL, compared to the monthly high of 2.96 million CEL on August 11.
In other words, in only two days, short traders had closed about 300,000 CEL positions.
What’s next for CEL?
Short squeezes are difficult to sustain over time, as history has shown.
Such expectations put CEL in danger of a sharp drop in the next weeks or months. As previously said, the token is already overbought, which contributes to the bearish picture.
As a result, it is critical right now to be careful and well-informed before joining any such rising tide!
The content provided in this article is not sponsored and is correct upto the best of my knowledge. This article is not financial advice and we are not responsible for any action taken in response to this article!
Feel free to check out our social platforms for daily crypto updates or contact us through the following channels:
Info Source: Cointelegraph, Yashu Gola
New to trading? Try crypto trading bots or copy trading
