CEL, the native token of troubled crypto lender Celsius Finance, is up 50% on the day, as members of the project’s community attempted to settle a small squeeze.
A short squeeze occurs when traders bet that the price of an asset will fall, but the price rises, forcing them to close their positions.
Rallying around the #CELhortSqueeze hashtag on Twitter, Celsius holders planned to force CEL to buy. ftx crypto exchanges, taking it to decentralized exchanges (DEX), and setting sell limit orders (sell limit orders can only be executed at the limit price or higher).
The strategy is similar to that employed by day traders during the GameStop short squeeze of January 2021, causing GameStop’s (GME) stock price to rise more than 1,000% in two weeks.
On that occasion, hedge funds with short positions in GME suffered heavy losses, trading the asset on the New York Stock Exchange was halted, and trading app Robinhood prevented users from buying GME (suing dissatisfied customers).
As of now, the CEL price is moving upwards due to the lack of Celsius; It is currently trading at $1.39, up nearly 50% on the day and 320% on the week, according to CoinMarketCap, although it has pulled back from its 24-hour high of $1.56. However, this is still well below the all-time high of over $8 the coin recorded in June 2021.
The GameStop Short Squeeze has a good lesson for traders, though; At the end of January 2021, the GME fell from $300 to $100. It is now trading at $135, which is—in fairness—higher than its price. before this Brief squeeze of about $20.
Celsius will ‘take time’ to stabilize liquidity
Celsius sent shockwaves around the crypto industry when it halted withdrawals, swaps and transfers between accounts earlier this month, citing “extreme market conditions”.
Yesterday, the crypto lender issued a statement in which it said that it “aims to continue to stabilize our liquidity and operations,” assuming that “this process will take time.”
The company said it is having “an open dialogue with regulators and authorities” and is seeking to “find a solution”.
Celsius’ lead investor, BnkToTheFuture, has offered to help the firm deploy “financial innovation” as part of the recovery plan. Simon Dixon, co-founder of BnkToTheFuture argued that “Celsius will not be resolved in a timely manner in traditional finance,” but declined to share details of the firm’s proposed recovery plan “before” [CEO] alex [Mashinsky] And the Celsius board is ready.”
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.
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