As the crypto market crashed this past week, one of the largest crypto lending and staking platforms announced a pause in all money withdrawals and transfers. Celsius, often referred to as a crypto bank, offers high yield to customers who are willing to lock up their digital assets for a certain period of time – offering up to 18% APY.
The lending platform was launched in 2017, pitched as a safe alternative to banks. In reality, the high yield being provided required very high risk.
Celsius’ current situation is potentially as bad or worse than Luna’s, the stablecoin that recently crashed. Both failures are a gut punch to crypto investors, sending fear, uncertainty and doubt (FUD) through the market and staining the legitimacy of the crypto market.
Along with the Celsius freeze, the trading platform Binance temporarily froze all Bitcoin withdrawals as it crashed towards 18 month lows. This freeze was just 30 minutes long; nevertheless, it sent more panic through the markets.
Three Arrows Capital, a once-reputable crypto fund, is now rumored to be insolvent – with over $400 million worth of positions liquidated.
Greed during the bull market has left a couple big players exposed in the bear. Unfortunately, it is often the users of these applications that get hurt the most. Celsius, which holds many similarities to a bank, is actually an unregulated lender with few laws protecting its users. The Celsius freeze is affecting over $11.8 billion in assets, among 1.7 million customers.
Can Celsius Drop Lower Than $0.25?
Following the news break about Celsius freezing withdrawals, the CEL token dropped below $0.25. It traded above $3 in 2022 and dropped to a $0.16 low. Only time will tell if Celsius can survive.
The price has somewhat stabilized since the original crash, and CEL now trades for just over $1. However, if Celsius is unable to keep its head above water financially, the coin could find a bottom much lower than just $0.25.
Why is Celsius Going Down?
Celsius began its downward trend as it followed Bitcoin in price movement, as most altcoins tend to do. The crypto bear market is what began to put Celsius in the sticky situation it is in. The bear market was largely affected by a number of macro trends hurting both crypto and broader markets.
The most violent part of the crash came immediately following the announcement that Celsius will be freezing transactions.
By offering users such ambitious yield on their staked crypto, Celsius put themselves in harm's way. Loans paid in dollars but collateralized against Bitcoin are not as feasible since Bitcoin has lost over half of its value in 2022.
Outrage on social media, a number of lawsuits and more allegations of illegal activity are piling up for Celsius. Getting out of this mess clean and restoring any form of trust holds for a tall task ahead.
How to Short Celsius
If you want to short cryptocurrencies, you can find a couple platforms to check out, one of which is ByBit. Another option is to use a decentralized exchange (DEX) and buy a short token. You can also do this with a leveraged position.
Trust for centralized crypto platforms is at extreme lows, and if you are wanting to short Celsius, you may want to do it through your non-custodial wallet.
Can Celsius Still Hit $5 in 2022?
Celsius briefly saw an all-time high of just over $8 in 2021. This level was achieved under perfect market conditions – with lots of money being printed – and when the public still held some trust for the organization.
For Celsius to reverse course, it will first need to ensure that those who trusted their money in Celsius’ hands gets it back and will need the wider crypto market to reverse course.
Where to Buy Celsius
If you think Celsius will shift its course, indicating a buying opportunity, you can buy it on Bybit or FTX or take the decentralized route through a decentralized exchange like Uniswap.
Will Celsius Keep Crashing?
If Celsius fails to return client money, it will likely continue to crash. If Celsius is able to make a nimble adjustment in its finances, repay its debts and regain trust, it could be a buying opportunity. It is hard to see upward momentum with the situation it is in.
Is Now a Good Time to Buy Celsius?
If you are looking for a maximum-risk bet, Celsius could be a buy for you. The market conditions paired with shady activities have crushed the CEL token. It is hard to see much of a bull case for this token, but crypto is unpredictable, and Celsius still has a fighting chance.
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