The CEL price crashed hard on Thursday morning after Celsius announced that it was filing for bankruptcy. Celsius token dropped to a low of $0.3942, which was the lowest level since June. It has dropped by over 65% from its highest point in June of this year.
Celsius fall from grace
At its peak, Celsius was a juggernaut in the cryptocurrency industry. It had more than 1.7 million customers globally and over $20 billion in assets. The company became successful as it offered investors significantly higher yields in the range of 18%.
The company’s downfall started a few months ago as the price of cryptocurrencies crashed. It then gained steam in May when Terra and its ecosystem plummeted. Subsequently, the firm suspended withdrawals and swaps in June. At some time, there were rumours that Goldman Sachs was raising a fund to acquire the company. Nexo also considered buying its assets.
Celsius downfall was capped on Thursday when it announced that it was filing for bankruptcy as it tries to restructure. It has about $167 million in cash and liabilities of between $1 billion and $10 billion. The Chapter 11 bankruptcy came a day after the company paid its debt to AAVE and a week after it paid to Maker. Aave and Maker are two of the biggest players in DeFi. In total, it has paid over $900 million to its lenders.
In a statement, the firm said that it intends to continue its operations. It added that customer claims will be handled through the Chapter 11 process.
So, what next for CEL price?
So, what happens to CEL token? Ideally, the value of the CEL token has declined substantially since Celsius is no longer operating. However, this is not to say that the token will drop to 0. Indeed, it could see renewed interest among pump and dump investors.
For example, while Voyager Digital filed for bankruptcy, we saw the VGX token surge on Wednesday. Similarly, in the stock market, we have seen many shares of bankrupt companies like Hertz go parabolic.
The four-hour chart shows that the CEL price crashed to a low of $0.3942 after Celsius went bankrupt. It then pared back some of those losses and is now trading at $0.5520. This is a notable price since it was the lowest point on June 30th. It is below the 25-day and 50-day moving averages.
Therefore, in the near term, the Celsius price will likely remain under pressure as investors reflect on the bankruptcy proceedings. In the long-term, we can’t rule out a situation where it goes parabolic.