You've probably already heard about it. In recent weeks, Celsius is also in turmoil, as the entire crypto market, and even had to block swaps and withdrawals from its platform.
What is Celsius? What happened and what's next? That's what we'll try to answer today!
What is Celsius?
Celsius Network is a cryptocurrency funding and lending platform opened in 2017 and based in London, UK.
Celsius Network also makes it easy to buy cryptos, by credit card or wire transfer, which greatly simplifies access to crypto-currency investments. Of course, it is possible to transfer crypto-currencies that you already own.
Celsius is a regulated platform. The company that runs it is registered and audited by several financial authorities in North America and Europe, including FinCEN, the U.S. Treasury Department that ensures compliance with financial regulations. Celsius claims to have nearly 1.5 million users on its platform.
What happened to Celsius?
"Due to extreme conditions, we are announcing today that Celsius is pausing all withdrawals, exchanges, and transfers between accounts." This is the statement made by Celsius on 12th June that had a devastating effect on the market, with BTC currently trading just above the $20,000 level.
Celsius did not explain what prompted its decision to freeze trading. Nonetheless, the cryptocurrency market is currently going through a rough patch. Celsius would also be affected by the de-indexing of a stablecoin, which would worsen the risks it faces.
What could be the possible cause of the above-mentioned extreme conditions? One possible explanation is the case of stake ether (stETH), a token that is at the center of attention amongst big investors and the recent crypto crash. At the time of writing this, data by ApeBoard, a portfolio tracker by blockchain analysis firm, Nansen, shows that Celcius still currently holds at least 409,000 stETH. With the Terra stablecoin project having imploded and stETH’s price trading below ETH, one can imagine the ripple effect that comes after this. To learn more about stETH de-pegging from ETH, stay tuned for our next article this week.
Tether in all this?
The world's largest stablecoin is known for lending money to Celsius against collateral in the form of BTC. It is therefore quite legitimate to ask whether the current crisis suffered by Celsius will not affect Tether.
According to statements from the company, USDT reserves are not overly impacted by the Celsius crisis, which is good news for the industry. I'll let you imagine what impact a collapse of Tether would have on the market.
What about CEL token?
As we have seen with Terra, when the company is in danger, the associated token suffers too, it is inevitable. From a technical point of view, we have CEL/USD which went from $0.50 on June 12 to a low of $0.09 on June 13 before recovering and reaching a high of $2.57 in the previous session.
Today CEL/USD is trading around $0.66, above the pre-announcement level. CEL's daily technical situation is positive, due to the huge pump that occurred yesterday. Nothing is set in stone though, as CEL is still trading almost in price discovery on FTX, well below its opening level.
The situation is not yet as alarming for Celsius as it was for Terra and it seems that the teams are on the warpath to find a solution. The market situation is extremely volatile and does not help platforms like Celsius either.
No one can predict when this extreme volatility will end, but there is no doubt that it will end at some point. As usual my friends, it's all about the cycle, it's when the whole planet announces the death of the sector, that it will rise from the ashes like a phoenix, once again.