Celsius’s CEL Token Jumps 8-Fold in Intraday Spike
The lender’s token reached a high of $2.57 in what appears to be a short squeeze.
But in the hour after the spike, the price of CEL fell back and was trading at about 54 cents as of press time. According to data from CoinMarketCap, that price put the market capitalization of CEL at approximately $125 million.
That's still up from 35 cents prior to a recent crash when Celsius halted withdrawals on Sunday, June 12, citing "extreme market conditions."
In response to the news, Celsius’s CEL token plummeted to 18 cents from 35 cents Sunday evening, a decline of 48%.
According to exchange data, it appears the latest price jump was brought on by a big spot buyer on crypto exchange FTX.
A trader who spoke with CoinDesk says the price action was indicative of a short squeeze, as shorting Celsius’s token had become an “overcrowded trade.” A "short" position is when traders bet on a token's price to fall.
A short squeeze occurs when the price of a token moves sharply higher, prompting traders who bet against it – often with borrowed money or tokens – to buy it back or "cover" the position, to avoid greater losses.
Questions surrounding Celsius's financial health have been making waves in cryptocurrency markets.
On Tuesday morning, Celsius appears to have paid off $28 million of its outstanding loan on Maker, a decentralized finance protocol that lends out DAI, a stablecoin. The firm appears to have an additional $250 million outstanding on its bitcoin-collateralized loan.
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