key takeaways
- Celsius’ CEL token surged over 300% today and crashed a few minutes later.
- The move may have been inspired by recent activity on the MakerDAO vault, which was rumored to be related to Celsius.
- The development followed Celsius’ suspension of customer withdrawals.
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Troubled crypto lender Celsius saw its CEL token surge—then crash—in an apparent short squeeze event today. The move could be triggered by signs of solvency on the rumored wallet related to Celsius.
Celsius Shorters Victims
Celsius’ CEL token rose briefly before crashing today as the company faced rumors of potential bankruptcy.
CEL crashed on Monday along with the broader crypto market, over the news that Celsius had halted customer withdrawals. Today it was briefly trading as high as $0.095 before recovering at around $0.33. It then jumped over 300%, above $1.42 on multiple exchanges. It reached $1.65 in the CEL/wETH liquidity pool on Uniswap V3, while FTX recorded a high of $2.57. However, the token crashed as soon as it jumped and started falling minutes later. It is trading around $0.57 at press time.
This move is known as a “short squeeze”, where a brief spike forces market participants to buy back their positions on an asset at a lower price. When there is a short squeeze, a domino effect occurs, causing prices to rise. In this example, the CEL jumped up and then fell sharply.
Celsius is a crypto lending platform that is known to offer clients yields on assets such as Bitcoin and Ethereum. CEL offers customers benefits such as rewards and discounts on Celsius loans.
The firm is facing liquidity issues due to market downturn, which is why sealed Client withdrawals, swaps and transfers took place on Monday, citing “extreme market conditions”. Rumors of the firm’s potential bankruptcy had circulated the crypto space for weeks, but the firm’s CEO, Alex Mashinsky, has repeatedly denied the claims.
Today’s brief squeeze may have been triggered by recent activity on the MakerDAO Vault Rumor Belongs to Celsius. MakerDAO is an Ethereum-based DeFi protocol that lets users mint DAI while depositing collateral. Wallet attached to the safe was facing Liquidated its wrapped bitcoin collateral, but on-chain data shows it deposited $28.1 million worth The DAI in the vault at 14:58:32 UTC.
Market participants may have interpreted the DAI deposit as proof of the firm’s solvency, although it has not been confirmed whether the wallet belongs to Celsius. After the rally, CEL is above Monday’s low. Nonetheless, it is still down 92.9% from its peak, and the Celsius withdrawal is still stalled.
Disclosure: At the time of writing, the author of this article owns ETH and several other cryptocurrencies.