Celsius (CEL) decreased its supply by 94% at the end of April, sending 94% of outstanding tokens to a burn address. The token burn surprised the markets, rallying from $0.14 to $0.96 after the burn was finally noticed. The past week was marked by a series of CEL rallies, reaching a peak at $0.98.
Celsius destroyed 94% of its supply in a single transaction as part of its bankruptcy procedure. In the past year, Celsius divested most of its assets, returning loan collaterals and shrinking its crypto lending ecosystem. Celsius took back the tokens from its whole ecosystem on October 12, 2023, and held them until the burn transaction.
Why Did Celsius Burn Tokens?
This is not the first token burn for Celsius. The platform started burns in October 2021, close to the peak of the bull market. The main goal was to decrease supply and make CEL more valuable.
After the bankruptcy, Celsius still controlled 652.2M tokens, which it could burn. The token was not needed, since it was not tied to lending and was not used for rewards.
The decision to burn was part of the bankruptcy settlement and involved only tokens that Celsius controlled directly. The burn apparently did not affect the ability to trade or use all remaining tokens.
Why is CEL Rising: Irrational Trading, Risky Shorting
The rise of CEL is entirely irrational, as Celsius has not announced a renewal of the project. The most probable reason is that CEL is now turning into a meme token and new buyers are just trying to see how high it can trade.
More than 78% of CEL activity is concentrated on OKX and Gate.IO, the last two exchanges to keep some of the token balance. After restructuring, only a few entities own actual CEL tokens and only those two exchanges have pairings with USDT and are capable of providing some liquidity. Even decentralized markets have completely abandoned CEL.
Celsius Has No Control Over Remaining Tokens
What is more curious is that the CEL token contract itself is interacting with addresses. Transactions are coming in from OKX and Gate.IO wallets, while small batches of tokens are sent to Uniswap V3 to trade the CEL/WETH liquidity pair.
Celsius has not announced a return to operations. However, in the months after the bankruptcy, CEL acquired small listings on Bilaxy exchange and other markets. Those listings are not related to Celsius, and may represent only pure risk-taking by traders.
The Ethereum token contract shows the new supply is just above 40M tokens, so CEL is now treated as a brand new scarce asset. CEL is also closely watched by traders for opportunities to short, in case the price reverts to the baseline.
CEL is also not rising by itself. In the past week, the practically useless token FTX (FTT) also went through another vertical rally. FTT had short-term rallies as high as $5, then went vertical in the past week before crashing again. FTT slid from a short-term peak above $2.20 to its current level of $1.52.
