No CEL-ling pressure yet
On the daily chart, CEL reached its intraday high of $1.67 per token on September 2 after a low of $1.15 the previous day. However, the token’s strong rally was accompanied by a decline in trading volumes, suggesting a lack of conviction among traders about further upward moves.
CEL’s gains emerged after Celsius Network filed a petition in bankruptcy court, ask that its customers with “certain Custody and Withhold accounts should be able to withdraw the amount of digital assets owed to them”.
Celsius has risen by taking cryptocurrencies from its clients and offering them mouth-watering returns by deploying their deposits into the broader crypto lending market.
But the market decline this year Created a $2.85 billion hole into Celsius’s balance sheet, prompting the company to freeze its customers’ accounts, trapping billions of dollars in more than a million accounts. In July, Celsius filed for Chapter 11 bankruptcy.
The price of CEL is likely to fall by 40%
Celsius Network’s willingness to return a portion of custody funds to customers is a welcome move. However, the amount offered is small compared to what the firm holds, as BnkToTheFuture CEO Simon Dixon points out.
#Celsius currently stating that those who were taken into custody 90 days prior to filing should be held. Custody is now $210 million and they want to release $50 million. They want to reserve the rest for recovery. They believe that all funds earned belong to #Celsius NOTICE This is an illegal bank https://t.co/efGb3XPU2b
— Simon Dixon (Beware of Impersonators) (@SimonDixonTwitt) September 1, 2022
Meanwhile, Celsius’ interest-bearing accounts, called Earn Accounts, had around $4.2 billion in crypto assets as of July 10. according to court documents. In other words, CEL’s 50% price rise now looks excessive, with negative fundamentals still weighing on the Celsius market.
From a technical perspective, CEL also risks a sharp price correction in September.
On the four-hour chart, the Celsius token has been drawing an “ascending wedge” since late August. This classic pattern usually leads to a bearish price reversal move, as shown in the chart below.
CEL is now testing the upper trendline of the wedge for a pullback to the lower trendline. This latest trendline is near $1.34, a level that has served as reliable support in recent trading history. Therefore, breaking below $1.34 could intensify the selling pressure.
The CEL falling below $1.34 opens the door for a rising wedge breakdown setup. The downside target for CEL, as a general rule of technical analysis, would be as low as the maximum distance between the upper and lower trendline of the wedge when measured from the breakout point.
In other words, the CEL could fall to $0.87 by the end of September, down 40% from the September 2 price.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.