What Is Celsius (CEL) Token? Can You Still Invest in It After the Crash? CEL Price Prediction

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The year 2022 was a challenging period for the cryptocurrency market, with major projects like Terra Luna, Voyager, and Celsius collapsing one after another, leading to a prolonged crypto bear market. Celsius Network was one of the largest cryptocurrency companies at the time, and when it filed for bankruptcy on July 13, 2022, the value of its native token, CEL, plummeted dramatically.

So, what caused the downfall of Celsius Network and its native token, CEL? Can you still invest in CEL after the crash?

Latest News and Updates on CEL Token

Celsius emerged from bankruptcy in January of this year, distributing over $3 billion in cryptocurrency and fiat currency to its creditors. As part of the restructuring plan, Celsius destroyed approximately 650 million CEL tokens (about 94% of the previous total supply) on April 30. The current supply of CEL is now reduced to around 40.6 million tokens.

Following the token burn, the price of CEL surged nearly 300% in a single week, breaking through $0.60.

What Is Celsius Network?

Celsius was a decentralized finance company that operated somewhat similarly to a traditional bank. The key difference was that Celsius dealt in cryptocurrencies rather than fiat currencies. Users could deposit their cryptocurrencies into the network and earn interest in return. Additionally, users had the option to take out crypto-backed loans.

According to its website, Celsius offered returns of over 7% for stablecoins like USDC and Tether, 7.25% for Polygon, 6% for Ethereum, and 6.25% for Bitcoin. The protocol then lent these pooled tokens to borrowers at higher interest rates. Celsius claimed that it did not use customers' cryptocurrencies for any purpose other than in-protocol lending and Bitcoin mining operations, touting its "transparency" and "real-time audits" as unique selling points.

At its peak, Celsius was considered one of the most successful and largest DeFi projects, with over $20 billion in assets under management.

Reasons Behind Celsius Network's Bankruptcy

The cryptocurrency market in 2022 was highly volatile and unstable due to significant financial issues such as inflation, weak stock markets, and interest rate hikes by the U.S. Federal Reserve. In May, Luna, associated with the stablecoin TerraUSD (UST), collapsed entirely after UST lost its dollar peg, further exacerbating negative sentiment around cryptocurrencies.

The collapse of Luna and TerraUSD wiped out $60 billion in investor value. Worse, it eroded confidence in the entire cryptocurrency market, which was already known for extreme volatility and rampant speculation.

Fearing a collapse in cryptocurrency values, people began withdrawing their crypto investments from Celsius Network and converting them into cash and other more stable assets. As more investors pulled out, others grew concerned about Celsius's ability to repay all deposited crypto funds. This led to panic, triggering a rush of withdrawals. On June 12, Celsius Network froze all cryptocurrency withdrawals, swaps, and transfers, citing "extreme market conditions" as the reason. This move terrified platform users, who feared Celsius was insolvent and no longer capable of repaying their investments.

Within hours of the announcement, Celsius's native token, CEL, plummeted 70% in one hour; by the next day, its price had fallen over 40%. On July 13, 2022, Celsius Network filed for Chapter 11 bankruptcy protection after a month of turmoil.

In a CNBC report, Timothy Cradle, Celsius's former Director of Financial Crime Compliance, stated that Celsius provided a service people genuinely needed but that the "biggest issue was a failure of risk management." Court documents revealed a $1.2 billion hole in the balance sheet due to bad trades, ending speculation about a return to normal operations and raising doubts about whether user funds would be returned.

Update: As part of its bankruptcy filing in July 2022, Celsius proposed a restructuring plan called the "MiningCo Transaction," aimed at improving creditor repayment by establishing a company focused on Bitcoin mining. The plan was approved by the court in December, and Celsius officially emerged from bankruptcy in January, distributing over $3 billion in cryptocurrency and fiat currency to creditors.

What Is the CEL Token?

CEL is the ERC-20 native token of the Celsius Network. It was used to generate rewards, provide loan discounts, and secure higher interest rates. The more tokens an investor held, the greater the returns. According to the website, holders of over 25,000 CEL tokens could earn up to 30% in bonuses and receive loan interest discounts of up to 25%.

CEL was first issued through an Initial Coin Offering (ICO) in March 2018, with 10% sold in a public sale and 40% in a pre-sale. 19% and 27% of the team tokens were allocated to the treasury, and the remaining 4% were given to partners and advisors.

The value of CEL depended on sustained buying pressure from institutional investors, which harmed the token's value in 2022.

CEL Token Burn

As part of the restructuring plan, Celsius committed to burning all its held CEL tokens on the effective date of the plan. On April 30, Celsius Network destroyed 652.2 million CEL tokens, representing approximately 94% of the previous total supply. The burned tokens were worth about $415 million.

The current circulating supply of CEL is 238,863,520 tokens.

CEL Price Performance Analysis

As of early May, CEL was trading at $0.5806, having surged 60.53% in the past 24 hours and reaching a high of $0.6182. With the price increase, CEL's market capitalization reached $138,692,591, ranking it 376th among all cryptocurrencies. Its 24-hour trading volume was $70,983,208.

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Celsius (CEL) Exchange Rate Statistics

(Data updated as of early May 2024)

Can You Still Invest in CEL? CEL Price Prediction

Since its launch in 2018, CEL reached an all-time high of $8.05 in June 2021. However, since then, its price has generally declined. In early 2022, CEL showed brief signs of recovery, but due to the broader crypto market crash and controversies, the token's value dropped sharply, especially after Celsius declared bankruptcy.

Some analysts, like Pete Huang from Coinbase, have argued that CEL's future value "should absolutely be zero." However, some investors remain hopeful. According to DigitalCoinPrice's forecast, CEL's price could reach $1.78 by 2025, drop to $1.69 in 2026, and potentially rebound to $2.26 in 2027. The website predicts prices of $2.86 in 2028 and $3.74 in 2029.

Nevertheless, concerns remain due to Celsius's bankruptcy filing and allegations of price manipulation. Before investing, always conduct your own research.

How to Buy CEL Token

If you're interested in CEL and ready to take the next step to purchase some tokens, you can start by following these general steps:

  1. Choose a cryptocurrency exchange that lists CEL.
  2. Create an account and complete any necessary verification processes.
  3. Deposit funds into your account, either in fiat or cryptocurrency.
  4. Navigate to the trading section and find the CEL trading pair (e.g., CEL/USDT).
  5. Place an order using a market, limit, or stop-loss order type.
  6. Specify the amount you wish to purchase and review the details.
  7. Execute the trade and consider setting take-profit and stop-loss levels to manage risk.

Remember, leverage trading can amplify gains but also losses, especially for beginners. It's advisable to start with lower leverage levels.

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Frequently Asked Questions

What is Celsius Network?
Celsius Network was a centralized finance (CeFi) platform that offered interest-earning accounts and loans on cryptocurrency deposits. It operated similarly to a bank but focused solely on digital assets.

Why did Celsius go bankrupt?
Celsius faced a liquidity crisis triggered by extreme market conditions in 2022, including the collapse of TerraLUNA. Widespread customer withdrawals exposed poor risk management practices and significant losses on bad investments, leading to Chapter 11 bankruptcy.

What is the CEL token used for?
The CEL token was designed to provide utility within the Celsius ecosystem, offering holders benefits like higher interest rates on deposits and lower interest rates on loans. Its value was tied to the platform's performance.

How many CEL tokens are left after the burn?
After burning approximately 94% of its total supply in April 2024, the circulating supply of CEL was reduced to around 40.6 million tokens.

Is investing in CEL token risky?
Yes, investing in CEL carries significant risk. The token is associated with a bankrupt company, and its future utility and value are highly uncertain. Price predictions are speculative, and investors could lose their entire investment.

Where can I trade CEL tokens?
CEL tokens are listed on several cryptocurrency exchanges. Always ensure you use a reputable and secure platform for trading.

Conclusion

The Celsius Network and its CEL token represent a cautionary tale in the cryptocurrency industry. While the recent token burn has reduced supply and sparked short-term price increases, the long-term viability of CEL remains highly uncertain due to the platform's bankruptcy and loss of trust.

Potential investors should exercise extreme caution, conduct thorough independent research, and only invest what they can afford to lose. The cryptocurrency market is inherently volatile, and tokens associated with failed projects carry additional risks.