Celsius, the crypto lending platform, has commenced the process of converting its altcoin price holdings into Bitcoin (BTC) and Ethereum (ETH). This move comes after receiving permission from the bankruptcy judge to proceed with the conversion. The exact timeline and extent of the altcoin season index sales remain undisclosed. Some transactions have already taken place since July 5. Notably, Celsius is now under the management of a bankruptcy trustee tasked with maximizing funds to repay creditors, particularly customers who suffered losses. The conversion aims to reduce risk and increase the likelihood of recovering funds for distribution.
Potential Impact on Altcoin Markets and Concerns Over CEL Token
The ongoing liquidation of altcoins by Celsius has raised concerns about its potential impact on altcoin markets. Analytics firm Kaiko suggests that this process could significantly increase selling pressure. Over the past year, liquidity for these tokens has declined. At that point, Celsius’ aggregate market depth for altcoins dropped by 40% since 2022. While the current market depth is estimated to be around $90 million, documents filed in court indicate that Celsius holds a considerably larger amount of altcoins. As a result, liquidating these altcoins without causing price falls may prove challenging for Celsius.
The Challenge of CEL Token and Other Altcoins in Celsius’ Portfolio
One of the main challenges faced by Celsius relates to the CEL token, issued in 2018. Despite its market value plummeting by 98% from its 2021 peak and falling below pre-bubble levels, Celsius still holds a significant amount of CEL tokens. However, the market depth for CEL has drastically diminished to just $30,000, mainly concentrated on OKX and Bybit exchanges. This presents a potential issue, as Celsius still possesses around $240 million worth of CEL tokens, exceeding its market capitalization. While the CEL token’s demise has long been anticipated, its complete implosion would have a limited impact on the broader crypto markets.
Altcoin Season Held by Celsius and Potential Impact on MATIC and LINK
Apart from CEL, Celsius holds various altcoins, including BNB, ADA (Cardano), SOL (Solana), MATIC (Polygon), DOT (Polkadot), LTC (Litecoin), BCH (Bitcoin Cash), UNI (Uniswap), AAVE, LINK (Chainlink), XLM (Stellar), and EOS. However, the quantities of some altcoins, such as SOL, UNI, ADA, BNB, BCH, LTC, AAVE, DOT, XLM, and EOS, appear to be minimal. On the other hand, Celsius may possess larger quantities of MATIC and LINK. Potentially it would make them more vulnerable to the conversion process. MATIC has already experienced a decline, while LINK has shown moderate growth over the year but experienced a decrease in June.
Currently, Celsius continues its altcoin conversion process. The impact on altcoin markets and the fate of the CEL token remain subjects of close attention.
