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Celsius announced that users could cumulatively withdraw up to $50 million from all the locked accounts. These funds are for users who own Celsius Custody Program and Withhold Accounts. This latest decision to reopen withdrawals has spiked the price of CEL by 50%.
As of September 2, CEL’s price stood at $1.67, showing a good price shift from $1.15 per token on September 1.
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The CELUSD chart on Tradingview.com indicates that the token has lost some of its gains this morning. It now stands at $1.50, which is still higher than yesterday’s lows and shows positive price movements.
But the sudden increase might not be sustainable. Data shows that CEL trading volume didn’t spike with the price. Analysts see this low volume as traders’ lack of conviction in a continuing uptrend.
Imminent Price Drop For CEL Looms
The CEL four-hour chart shows that the token started painting a rising wedge since the August end. This pattern is usually a sign of an upcoming bearish price reversal. Also, CEL is testing the upper trendline for a pullback to the lower line.
CEL latter trendline is closer to $1.34. It has been serving as a good support zone. Any break below this support might increase the selling pressure in the market. A rising wedge breakdown setup will emerge if the CEL price plummets below $1.34.
By that, the token’s downside target would be as low as the maximum distance between the upper and lower trendline of the wedge if measured from its breakout point. The interpretation, CEL might lose 40% from September 2 price to stand at $0.87 by the end of September.
Negative Fundamentals Hanging Over Celsius
Celsius recently requested the Bankruptcy Court to permit its CPWA clients to withdraw their funds. Celsius utilized users’ funds to operate in the broader market while promising them mouth-watering returns.
But the firm froze the accounts when the crypto winter wrecked havoc on its balance sheet. Data showed that Celsius lost $2.85 billion due to the market crash. The loss led to locking billions of dollars in more than one million accounts on its network.
The firm might have pushed CEL’s price up by this announcement. However, it might not sustain the price increase. According to Simon Dixon, BNKToTheFuture CEO, the total money locked by Celsius in the CPWA is worth $210 million. But the company wants to release only $50 million.
Related Reading: Why Vitalik Buterin Expected Crypto Crash To Happen Earlier, ETH Price Battles With $1,600
Also, as of July 10, the court documents showed that Celsius Earn Accounts had up to $4.2 billion worth of assets. These factors will impede the growth of the network token. Unless the firm acts accordingly, the 50% price growth might be a waste.
Featured image from Pixabay and chart from TradingView.com
