CEL prices fall 64% over six days in the wake of the Terra fiasco

NEW DELHI (CoinChapter.com) — Crypto lending platform Celsius’s native token CEL fell to all-time lows after the token slumped 64% between Jun 6’s high ($0.8) and Jun 11’s low ($0.29).

Furthermore, CEL prices fell 38% on Friday, the token’s highest single-day decline since its listing on FTX. The Celsius token started Saturday in the green, but bears moved in, and the altcoin pared its gains. CEL prices fell more than 35% between intraday high ($0.445) and low ($0.29) levels.

Moreover, the upper wick on the day’s candle indicates that bears continue to sell the CEL token. Meanwhile, the momentum oscillator MACD continues to forecast a strengthening downward momentum for the CEL prices.

Additionally, positive bars on the MACD histogram have been contracting, indicating that the MACD line (difference between 12-day and 26-day EMA) is moving towards the MACD signal line (9-day EMA of MACD).

The MACD lines might soon chart a bearish crossover. Traders usually consider the pattern a sell signal.

If traders continue to sell, CEL prices might continue their downtrend and fall to support near $0.25. A breach below immediate support could drive Celsius to further lows and test support near $0.2. Finally, a marketwide sell-off could Celsius prices to $0.16 before the token recovers.

Oversold RSI To The Rescue?

Meanwhile, Celsius’s relative strength index moved in the oversold region, with a value of 27.69 on the daily charts.

Also Read: LUNA 2.0 down 85% since ATH. Terra Classic (LUNC) rallies.

RSI measures the magnitude of recent price changes to analyze overbought or oversold conditions. An oversold RSI indicates a bullish trend reversal is on the cards. With CEL prices at oversold levels, investors who rely on RSI would likely move in to buy the dip and trigger a rally.

However, given the bearish sentiment for high yield lending platforms, it is unlikely CEL would stage an uptrend. The oversold RSI might lure less-experienced traders into a likely bear trap.

If bulls do move in, the Celsius token might break above immediate resistance near $0.402. Then, after consolidating above its immediate resistance, CEL prices might target resistance near $0.48, which previously supported CEL price action between May 12 and Jun 9.

Investors Concerned About Celsius After Terra’s Collapse

Celsius’s CEL token likely fell because of rising concerns over the sustainability of the high yields on the crypto lending platforms in the wake of the collapse of Terra’s UST. Celsius promises users as much as 30% extra returns per week.

Demand for high-yielding lending protocols has fallen since the Terra protocol fell last month. The now-defunct blockchain promised yields high as 20% to UST stablecoin depositors. In hindsight, the high yield protocols were one of the main factors behind Terra’s growth.

Celsius noted that the decline in prices might result from market factors unrelated to the company’s performance. In a statement to Bloomberg, Celsius believes the entire crypto sector is currently in a crypto winter, which means every cryptocurrency’s prices are currently bearish.

The price of all cryptocurrencies have clearly been affected by a general market downturn. We are squarely focused on building for the long-term.

Celsius said in the statement

Furthermore, analysts are worried that the Celcius Network might be running out of liquid funds to pay back its investors. Discussions are making the rounds on Twitter about Alameda Research allegedly redeeming almost 50,000 stETH for ETH.

Also Read: Cardano eyes relief rally as ADA paints a “double doji” pattern.

The issue is that @CelsiusNetwork is quickly running out of liquid funds to pay back their investors who are redeeming positions.

Billions in illiquid positions that they are taking massive loans against to payout their customer redemptions. https://t.co/jnjuWe8qhs

— Small Cap Scientist 👨‍🔬🧪🥼 (@SmallCapScience) June 10, 2022

In detail, Alameda is one of the largest holders of Lido’s stETH. Although Alameda’s redeeming of stETH might not be a concern, analysts remain worried that the platform is functionally insolvent, with Celsius likely to run out of liquid ETH in five weeks.

Moreover, Celsius has also been a victim of a $70 million exploit of Stakehound. Additionally, several of its clients had invested in the Terra ecosystem, leading to Celsius losing a significant amount of money over the past 12 months.

At the time of writing, CEL was trading at $0.29, down 23.68% on the day.