In one week, the price of the Celsius token (CEL) experienced a dizzying ascent. A particularly strange phenomenon since the exchange behind this token is on the verge of bankruptcy. Should we see a phenomenon of the type pump and dump ?
Celsius, the price of crypto explodes
On Twitter, an account drew the attention of the crypto community to the recent surge in the price of CEL. He compared this situation to that of the video game distributor GameStop (GME). Which was narrowly saved by the coordinated force of its shareholders, especially small investors.
At the time, retailers, aware of the company’s liquidity problems, pushed GME’s share price higher. To do this, they bought up a large number of stocks and short-term option contracts. Since then, despite significant fluctuations, equities have never recovered to their pre-crisis level.
So, faced with a similar situation, CEL holders may have decided to take a similar path. Over the past seven days, the price of Celsius has risen from $1.83 to as high as $4. No doubt that the squeeze shorts of the token is in progress. In other words, traders who have sold short are inclined to buy back their positions quickly. This stimulates the skyrocketing prices.
The connection between the two events seems more or less obvious. However, there are some shadows on the board in the case of Celsius. First, there is very little cash available. This is because most of the funds are locked in the wallets of the exchange. Second, the fate of the token remains uncertain, with a high probability of significant failure.
That said, it is to be expected that the price of the token will continue to climb to new highs. Indeed, the thousands of customers affected by the decline of Celsius are mobilizing for it. The others should follow in a mass movement. On the other hand, in the medium and long term, the forecasts are not so encouraging. The risk of collapse seems significant.
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