The token for Celsius (the bankrupt company), just shot up 300%. Here's why...
This is nuts...remember Celsius?
They're the guys who said:
“Welp, due to the crypto market going down, we’ve run out of cash - so we’re just gonna holt all user withdrawals and use their money to pay our debtors.”
(We’re paraphrasing, but you get the gist).
So those guys had a token/cryptocurrency/coin, CEL.
And that token has gone up from $0.15 on 12 July (when the bankruptcy news was announced) to…wait for it…$1.63 as of yesterday (Mon 8th Aug).
How in the world could a token, related to a bankrupt crypto lender, go up by that much?
The answer: A Twitter-fueled short squeeze.
Lettuce explain.
A ‘short squeeze’ happens when a group of people get together to raise the price of a stock. Those that ‘shorted it’ (i.e. bet it would go down) are then forced into buying back their bets at a higher price - and buying pressure = a further rise in price.
See, when CEL went way down to $0.15, a bunch of people thought it would go even lower; so they shorted it.
Problem is, some savvy Twitter users saw this, and banded together creating the hashtag #CELShortSqueeze.
(A similar thing happened with Gamestop and the subreddit, r/WallStreetBets).
On Monday, the price spiked as high as $1.63, and about 300,000 CEL short positions were closed on FTX.
While some analysts are optimistic about CEL’s long-term recovery, this isn’t all good news for CEL coin’s future.
In a short squeeze with an embattled asset like CEL, there's limited upside for investors trying to create the squeeze other than activism or to show support to Celsius.
On the other hand, there’s potential for a big downside.
If everyone decides to sell their tokens and take profits after the short positions are closed out, the token could potentially spiral all the way back down to $0.15 (or worse).
Regardless of where things go from here, retail investors have notched another win against institutional short sellers.
...isn't the internet wild?
