The native token of the now-defunct Celsius Network, CEL, has experienced a remarkable price surge following a substantial reduction in its token supply.
On-chain data reveals that Celsius burned over 94% of its total supply on April 30, reducing it from 695.65 million CEL to 40.55 million CEL. These tokens were transferred to a null address, marking the third-largest transaction in Celsius’s history.
Following the token burn, CEL has surged by 360% over the past week, experiencing a 67% increase in the last 24 hours alone. At the time of writing, it is trading at $0.94, a level not seen since November 2022.
The total market capitalization of Celsius currently stands at $38.2 million, with a daily trading volume of $78 million.
According to data provided by Santiment, the CEL Relative Strength Index (RSI) has surged from 82 to 89 in the past 24 hours, indicating that Celsius may be overvalued and overheated at its current price.
Additionally, Santiment reports that Celsius’s total open interest has increased by 69% in the last 24 hours, rising from $7.91 million to $13.39 million. This sudden surge in open interest could lead to higher price volatility for CEL, potentially resulting in increased liquidations.
Despite the price surge, the Celsius total funding rate is currently hovering around negative 0.004%, indicating that traders betting against CEL’s price increase are slightly outnumbering long-position holders.
With the heightened RSI and open interest, CEL is operating in a high volatility zone, raising the possibility of a price downturn in the near future.
Summary Review: The recent surge in the price of Celsius (CEL) following a significant reduction in its token supply highlights the impact of token burns on cryptocurrency markets. While CEL has experienced a remarkable increase in value over the past week, indicators such as the Relative Strength Index (RSI) suggest that the asset may be overvalued and susceptible to a potential price correction. Furthermore, the surge in Celsius’s total open interest could lead to heightened price volatility and increased liquidations, adding further uncertainty to CEL’s future price movements. Despite negative sentiment from traders betting against CEL’s price hike, the market remains dynamic, with the possibility of a price downturn looming. As investors navigate the volatile landscape of cryptocurrency markets, it is essential to exercise caution and conduct thorough research before making investment decisions. While token burns can create short-term price spikes, the long-term sustainability and value proposition of digital assets like CEL depend on a variety of factors beyond supply reduction alone.
Disclaimer: Remember that nothing in this article and everything under the responsibility of Web30 News should be interpreted as financial advice. The information provided is for entertainment and educational purposes only. Investing in cryptocurrency involves inherent risks and potential investors should be aware that capital is at risk and returns are never guaranteed. It is imperative that you conduct thorough research and consult with a qualified financial advisor before making any investment decision.
