Celsius Token Surges Despite Company’s Bankruptcy.

Twitter Driven Short Squeeze provides surge

The Celisus token has seen a recent surge desptie the company’s bankruptcy. In a move reminiscent of the WallStreetBets 2021 Gamestop push another social media push has used a “short squeeze” to create an opportunity for some to change the trajectory of an asset.

In 2021 WallStreetBets, a group of maverick investors on a reddit community pushed the shares of video game merchant GameStop from $20 USD to $480 USD during a short squeeze in January of 2021. This move drove hedge funds like Melvin Capital into substantial losses due to companies like Melvin Capital being forced to liquidate massive bets against the stock. Many members and small investors became millionaires overnight with one such example being a single investor turning $50,000 into $48 million.

This time the asset in question is the CEL token of the now bankrupt Celsius Network. Celsius is a crypto lender that has recently filed for bankruptcy after being another of the victims of the $2 Trillion USD crash of TerraUSD and a very rough bear market. The company had paused withdrawals , swaps, and transfers on its platform to stabilize business and protect clientele.

The Celsius token had dropped to below $0.15 on June 12 during the time of the announcement that withdrawals were being halted. Currently the token is at a price of $3.81 which marks well over a 600% gain since July 13 which was the date Celsius filed for bankruptcy protection. This price is even higher than before financial difficulties occurred for the platform.

Source CoinGecko.com

Growth equities are trying to recover from this bear market so seeing speculative assets and meme stocks surging is not too far out of the ordinary. 

On Twitter a “Short Squeeze “ was organized under the hashtag #CELShortSqueeze.

According to Wikipedia, a short squeeze is a “rapid increase in the price of a stock owing primarily to an excess of short selling of a stock rather than underlying fundamentals” what this basically means is a stock’s price is rapidly increased by having an unusual number of short sellers holding positions on the stock, these sellers coincidentally decide to cut losses and exit at the same time. The price of the stock rises as the sellers bail out to cut losses. Short sellers borrow shares of an asset they assume will drop in price and purchase them if they fall in price. If the seller was right they pocket a profit from the price when they initiated the short and the price when they buy those shares back but if they are wrong they have to purchase the stock at a higher price and pay the difference.

As Celsius went through the bankruptcy process many believed the token would continue to drop and started to short the coin on exchanges, this is where the correlation with 2021 and the GameStop situation comes to play. Just like that situation some investors saw the opportunity to move in a different way during this period. The GameStop situation saw major trading firms short the $GME stock and the wallstreetbets investors bet against that short causing those big investment firms and hedge funds to lose big.

 Short squeezes force short sellers to buy back at a higher price to cover positions, these short sellers are now seeing a significant rise in price of the token at the moment and could very well face the same fate as Melvin Capital. It is worth noting that Voyager Capital recently saw its token surge over 250% during a short squeeze , Voyager has also filed for bankruptcy recently.

Currently 4.4 million CEL tokens are held on FTX, this is reportedly more than the combination of all other crypto exchanges. The short positions of the token on the platform are more than 3 million at this point in time. 

The community is putting pressure on sellers by purchasing the tokens, withdrawing the assets from the exchange, placing them in a private wallet and setting a sell order at extremely high prices. This could very well go the same way as the GameStop situation and many new millionaires could be made from this situation, that being said many more could lose out instead.

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