The price of CEL, the native token of the Celsius Network, has nearly quadrupled since June 19 in what appears to be a frenzy sparked by day traders.
CEL price short squeeze
The price of CEL went from $0.67 on June 19 to $1.59 on June 21, which is an increase of 180% compared to the 12.37% rise of the cryptocurrency market in the same period.
In particular, the rally started after PlanC, an independent market analyst, will announce a $20 million reward for anyone who could prove that Celsius Network suffered a coordinated attack at the hands of a third party, prompting the crypto lending firm to suspend withdrawals last week.
The announcement sparked a frenzy on Twitter, with many accounts posting the hashtag #CelShortSqueeze in their bios, reflecting their intentions to target investors who have bet on CEL’s price decline.
The hashtag was trending in the United States on Twitter. Meanwhile, internet queries for the keyword “CEL short squeeze” also hit a perfect score of 100 between June 12 and June 18, according to data tracked by Google Trends.
The hashtag “trending” and the keyword hint that traders bought CEL tokens en masse, thereby pushing their price higher.
Thus, investors who were “short”, that is, those who borrowed and sold the token in anticipation of buying it back at a lower price, had to buy back at a higher price to “hedge” their bets. bassists.
As a result, the so-called “short squeeze” was successful, leading to a huge rally in the CEL.
$CEL this actually might become the trade of the year. Shorts got REKT big time…
You can’t make this shit up, that’s why I love #crypto #Celsius #CelShortSqueeze pic.twitter.com/A6OQwoQMhS
— DoopieCash® (@DoopieCash) June 21, 2022
The event served as a reminder of the popular GameStock trading frenzy in January 2021, in which an army of Redditors profited by damaging the short positions of Melvin Capital and other hedge funds, causing billions of dollars in losses.
Platform insolvency risks
Celsius Network, which managed more than $20 billion worth of digital assets last year, is currently at risk of becoming an insolvent organization. The reason is their inability to pay excessively high returns to clients (up to 18%) on their cryptocurrency deposits.
As of May, Celsius only had $12 billion worth of assets, almost half of what it had at the start of 2022, according to its website. The firm stopped disclosing its assets under management afterward.
CEL, a native coin within the Celsius ecosystem for earning interest income and paying down debt, remains under selling pressure, trading almost 84% below its peak of $8 in April 2021.
The CEL/USD pair is currently back at $1.95 as its range resistance level, according to the Fibonacci retracement chart below.
While a successful break above the level could see CEL test $3.11 as its next upside target, a pullback, on the other hand, could see the price drop towards $0.34, the current support of the range, by 73%. below the current price.
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