No CEL-ling pressure for now
On the daily chart, CEL surged to its intraday high of $1.67 per token on Sep. 2 after lows of $1.15 the day before. However, the token’s sharp rally accompanied lower trading volumes, suggesting a lack of conviction among traders about further upside moves.
CEL’s gains appeared after Celsius Network filed a motion with the Bankruptcy Court, requesting that its clients with “certain Custody and Withhold accounts should be able to withdraw the amount of digital assets owed to them.”
Celsius pulled itself up by taking cryptocurrencies from its clients and offering them mouth-watering returns by deploying their deposits in the broader crypto lending market.
But the market downturn this year created a $2.85 billion hole in Celsius’s balance sheet, prompting the firm to freeze its clients’ accounts, thus trapping billions of dollars of more than a million accounts. In July, Celsius filed for Chapter 11 bankruptcy.
CEL price at risk of 40% drop
Celsius Network’s willingness to return a portion of Custody funds to clients is a welcoming move. However, the amount offered is little compared to what the firm holds, as BnkToTheFuture CEO Simon Dixon points out.
#Celsius currently stating that those that were moved to custody 90 days before filing should be withheld. Custody is now $210m & they want to release $50m. They want to reserve the rest for clawbacks. They believe all earn funds belong to #Celsius OPINION This is illegal bank https://t.co/efGb3XPU2b
— Simon Dixon (Beware Impersonators) (@SimonDixonTwitt) September 1, 2022
Meanwhile, Celsius’s interest-bearing accounts, called “Earn accounts, had about $4.2 billion worth of crypto assets as of July 10, according the court documents. In other words, CEL’s 50% price rally now looks overextended with negative fundamentals still hanging over the Celsius market.
From a technical perspective, CEL is also at risk of a sharp price correction in September.
On the four-hour chart, the Celsius token has been painting a “rising wedge” since late August. This classic pattern typically leads to a bearish price reversal move, as illustrated in the chart below.