Celsius (CEL) price gains 600%+, but analysts cite exchange error and a massive short squeeze

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Celsius (CEL) price gains 600%+, but analysts cite exchange error and a massive short squeeze
Minersgarden


Discussions about Celsius continued to grab media headlines on June 14, with news involving the platform’s CEL token making huge gains after what appeared to be an exchange glitch or a short squeeze. CEL price surged from $0.18 to $1.55 in a sudden candle before falling back to $0.60 in the same one-hour candle.

CEL/USDT 1-day chart. Source: TradingView

For now, analysts are taking a wait-and-see approach to the reasons for the explosive price breakout. Some cited Celsius as the reason for repaying some of its debt, while others pointed to a possible error on the FTX exchange as the cause of the short squeeze.

Has debt repayment boosted investor confidence?

Celsius has been scrambling to pay off many of its debts, which some investors may see as a sign that the platform will be able to survive the current chaos.

Twitter analyst Hsaka said on-chain data showed that $28 million in Dai (DAI) recently deposited into a Celsius-controlled wallet had been sent to a separate address he identified as a debt repayment address.

coinbase
Celsius Wallet Transactions.Source: Twitter

Analysts believe Celsius’ strategy is to lower the liquidation price of the MakerDAO vault in which it holds funds and ultimately avoid bankruptcy.

UI issues on FTX

While starting to pay down debt may help inspire confidence in Celsius, some cryptocurrency traders have reported problems when trying to buy and sell tokens on the FTX exchange.

Several replies to the aforementioned tweet confirm the difficulties users are having when trying to sell CEL on FTX, with Twitter user Karl Larsen saying they “can only fill my shorts at 0.87-0.95”.

Analysis provider TheKingFisher has also pointed out that the difficulties with the FTX UI may be part of the rapid surge in CEL, and he has published the following chart highlighting when the UI drops in relation to the timing of the CEL price surge.

CEL/USD price.Source: Twitter

According to TheKingfisher, when the user experience degrades, “most traders [were] Unable to hedge, close [or] reduce their positions. “

The company said,

“The spot market breaks $2 to break the index and intentionally trigger liquidation. This is spot manipulation by clearing traders. The index is calculated on FTX itself. This is outside of their fight against fraud [to] maintain market order. “

RELATED: Nexo proposes to buy out Celsius’ loan during withdrawal moratorium

It’s just another brief squeeze

Some analysts say that, as Saleem Lala pointed out, the price breakout is nothing more than an old-fashioned bear squeeze.

It remains to be seen what will happen to the price of CEL moving forward, and it seems the most likely culprit is cascading liquidations, as these types of events are relatively frequent during periods of high market volatility. For example, the Chain (XCN) token experienced a similar event on June 14, seeing its price drop by 95% due to cascading liquidations.

The views and opinions expressed here are those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk and you should do your own research when making a decision.



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