14 June 2022, Baden-Wuerttemberg, Rottweil: The logo of the crypto company Celsius is seen on the … [+]
Bear-baiting Celisans, devotees of the CEL token, have been supporting the cryptocurrency at about 80 cents, squeezing short sellers after Celsius Network
CEL
Celsius’ CEL token slid as low as 39 cents after the filing, down 95% from the record $8.03 last year. But the crypto recovered to 83 cents the next day and has hovered in the 80-cent range since, trading at 78 cents today, according to data provider Nomics. Until the company offers a plan to exit bankruptcy protection, it is unclear if the tokens have any intrinsic value at all.
ADVERTISEMENT
The problems at Celsius are part of a broad decline in cryptocurrencies. Total market value for the asset class, as measured by CoinGecko, is currently $1.1 trillion, down 58% for the year but up from $986 billion on June 13, the day after Celsius suspended withdrawals, swaps and transfers among accounts.
To protect their investments, Celsians have banded together under the Twitter hashtag #celshortsqueeze to make it difficult to short the CEL token. Some were apparently incensed at facing margin calls on loans backed by the tokens as they declined in value.
Interested in learning more? Subscribe to the Forbes CryptoAsset & Blockchain Advisor here.”
ADVERTISEMENT
“The #celshortsqueeze began as a grass-roots ‘revenge of the shorts’ trade by those in the community that suffered liquidated $CEL-backed loans,” says Jade, a part-time investor and writer who goes by @cryptoismyjam on Twitter and holds 20% of her crypto portfolio in Celsius. Jade requested to remain partially anonymous because of death threats to Celsius management and users following the first day of bankruptcy-court proceedings.
The movement asks Celsius supporters to buy CEL tokens on the FTX cryptocurrency exchange – or Uniswap for U.S.-based customers – and then send them to private, self-custody wallets, effectively taking them out of circulation from centralized exchanges.
ADVERTISEMENT
According to a blog post by Jade, spot shorters, who borrow CEL tokens from FTX and Uniswap and then sell the tokens – hoping to buy them back at lower prices before returning the crypto – are forced to look to decentralized exchanges to close out their positions. On such markets, users set the prices at which they are willing to sell, limiting liquidity.
The bankruptcy proceedings have also restricted CEL availability, as only 59% of tokens remain in circulation, with the others either locked up in Celsius or held by private wallets off of exchanges, according to data provider Nomics.
“Prior to the filing, there was a fear that Celsius could undo withdrawals at any time,” says Jade. “Now with the Chapter 11 filing, any withdrawals and/or swaps are halted indefinitely until the restructuring process is completed.”
ADVERTISEMENT
She’s not the only one who views the bankruptcy filing as a positive move for the token. “The details around chapter 11 and what it actually represents the reorganization of business structure” has motivated Celsians to proceed with the #celshortsqueeze movement, said a community member who goes by the name CEL_100 on Twitter. Like Jade, he requested to only be referred to by his Twitter name because of threats.
Still, the company has not made clear how, or when, it will pay the $4.7 billion it owes to users. A presentation for the initial bankruptcy hearing on July 15 showed that Celsius plans to provide customers with the option to recover their crypto assets in cash or to “remain long” in crypto. Though details remain hazy, the proposal is reminiscent of the Bitfinex hack of 2016, when the controversial exchange offered a newly created token in exchange for nearly 120,000 stolen bitcoins, replacing them with cryptocurrency revenue over the coming year.
The #celshortsqueeze movement predates the Celsius bankruptcy filing. On June 14, only two days after the lender announced it had paused withdrawals, the price for CEL token shot up 77 cents to $1.14 in a matter of minutes before closing at 70 cents. While the surge was not isolated to a single exchange, the highest peak was FTX, indicating significant purchasing pressure in the top crypto exchange.
ADVERTISEMENT
CEL token price shot up in a matter of minutes shortly after the crypto lender paused transactions … [+]
The movement is not unlike the GameStop
GME
The GameStop and Celsius short squeezes were largely led through social-media campaigns, utilizing Twitter and Reddit to get users to buy the shorted instrument and drive the price up. “Meme culture defines crypto Twitter and crypto by default,” Jade says.
ADVERTISEMENT
This news is republished from another source. You can check the original article here
Be the first to comment