In the cryptocurrency market, the platform token $CEL of Celsius Network has recently seen a remarkable surge. Data shows that as of May 6th, the price of $CEL surged by an astonishing 91.85% in the past 24 hours, far exceeding other currencies. This significant price fluctuation has sparked widespread attention and discussion within the industry.
The direct trigger for this surge can be traced back to a major move on May 1st: during the bankruptcy reorganization process, Celsius Network announced the destruction of almost all of its platform tokens, totaling 652 million $CEL, accounting for 94% of the total supply. This large-scale token destruction significantly reduced the market supply of $CEL, decreasing it from the original several hundred million to only 40.55 million.
Following this token destruction, the market performance of $CEL has significantly improved, and its market value has sharply risen from $5.61 million before the destruction. Trading activities for $CEL continue on multiple mainstream exchanges such as OKX, Bybit, Bitget, Gate, and MEXC, indicating increased liquidity and market attention. This event not only brought positive attention to Celsius Network in the market but also added a new focus for discussion in the cryptocurrency field.
Behind the Surge: Token Destruction and Market Reaction of Celsius Network
In understanding the factors behind the surge in the price of Celsius Network's (CEL) token, the most crucial factor is the token destruction carried out after its bankruptcy reorganization. In July 2022, Celsius applied for Chapter 11 bankruptcy reorganization and proposed a plan called "MiningCo Trading," which focused on Bitcoin mining to improve the repayment plan for creditors. This strategy was approved by the court at the end of 2023 and officially implemented in early 2024, enabling Celsius to distribute over $3 billion in cryptocurrency and fiat currency to creditors.
In September 2023, Celsius submitted an application to destroy all $CEL tokens under its control on the effective date of the reorganization. The specific operation was carried out on April 30, 2024, as Celsius executed the destruction by sending 652 million $CEL tokens to a burn address, which accounted for 94% of the previous total supply and had a market value of approximately $415 million. After this destruction, the circulating supply of $CEL was significantly reduced to approximately 40.60 million tokens.
The direct result of the destruction was a significant impact on the market supply and demand situation. The sharp reduction in the total token supply, combined with the market's positive response to Celsius's successful bankruptcy reorganization, collectively drove a sharp increase in the price of $CEL. Starting from a low of $0.13, $CEL's price soared to $0.58 within a week, with an increase of up to 291%. The daily increase even reached 90%, with the highest price reaching $0.5899.
This strategy by Celsius also reflects its financial emphasis on the value of the token. In the reorganization plan, Celsius proposed that regardless of how these tokens are ultimately handled, a specific value should be assigned to each $CEL token, estimated at $0.25. This valuation became particularly important after the destruction due to the market supply contraction.
Additionally, it is worth noting that despite Celsius being able to destroy only the tokens it holds and emphasizing the inability to cancel all $CEL token trades or stop exchange trading, the market's response to its token price remains significant. This market dynamic not only reflects the sensitivity of the cryptocurrency market to major events but also demonstrates investors' rapid response to supply and demand changes.
In summary, the token destruction by Celsius Network directly triggered a significant change in market supply and led to a substantial surge in the price of $CEL in the short term. This event not only signifies a strategic adjustment for Celsius after its bankruptcy reorganization but also demonstrates the high responsiveness of the cryptocurrency market to such major events.
About Celsius Network
Celsius Network is a centralized finance (CeFi) platform co-founded by Alex Mashinsky, Daniel Leon, and Nuke Goldstein in 2017. As an innovative cryptocurrency lending platform, Celsius focuses on providing users with comprehensive banking and financial services to earn stable returns in the crypto economy.
The core functions of the platform include the ability to provide over-collateralized loans to users at lower rates, while earning high interest by depositing crypto assets. Additionally, Celsius offers fiat on-ramp and off-ramp services, as well as a digital wallet for everyday payments. Users primarily conduct various operations through the mobile application developed by Celsius, which supports up to 33 different cryptocurrencies.
Celsius's business model is based on attracting user deposits and earning high-interest returns, while lending these deposits to institutional clients to generate revenue. This model initially achieved great success on the platform but also exposed shortcomings in risk management. In July 2022, due to severe financial crisis, Celsius had to apply for bankruptcy protection.
Within Celsius's ecosystem, the $CEL token plays a crucial role. This native token is used to increase deposit yields, obtain discounts on loan interest, and qualify holders for various loyalty levels to enjoy additional benefits. The platform claims to allocate 80% of its revenue to provide high-interest returns and low borrowing costs for users, ensuring the maximization of user benefits.
In addition to lending and deposit services, Celsius has also ventured into Bitcoin mining, further diversifying its sources of income. Nevertheless, with the volatility of the cryptocurrency market and changes in the economic environment, Celsius has faced increasing challenges, ultimately leading to its bankruptcy reorganization. After undergoing a series of legal and financial restructurings, Celsius is currently seeking to regain market trust and support through strategic adjustments.
Overall, Celsius Network has experienced a journey from its initial success to bankruptcy challenges, reflecting the dynamism and uncertainty of the cryptocurrency market, while also demonstrating the potential influence and risks of CeFi platforms in the modern financial ecosystem.
Conclusion: Reflection and Impact of Celsius Token Surge Event
The token surge event of Celsius Network is not only a market phenomenon but also a vivid demonstration of the coexistence of risks and opportunities in the cryptocurrency field. This event highlights several key dynamics of the cryptocurrency market and provides important insights for investors and platform operators.
Firstly, the significant surge in the price of Celsius's token $CEL demonstrates the direct impact of supply and demand dynamics on the cryptocurrency market. By destroying a large portion of circulating tokens, Celsius significantly reduced the supply of $CEL in the market, leading to a sharp increase in the token's price in a short period. While this strategy is effective, it has also sparked discussions about market manipulation and transparency, highlighting the need to maintain fairness and transparency when initiating major events in the cryptocurrency market.
Secondly, the soaring price of $CEL tokens reflects the market's optimistic expectations for Celsius's successful reorganization and future potential. This change in sentiment is an indicator of investor confidence, indicating that even after experiencing significant financial and legal challenges, cryptocurrency companies still have the potential to regain market support through strategic adjustments.
Furthermore, this event also serves as a reminder of the risks for investors in making decisions in dynamic and sometimes opaque markets. While significant short-term gains may be achieved, such high volatility may also bring corresponding risks, especially in the absence of sufficient market information.
Lastly, the surge in Celsius token prices should prompt regulatory authorities to pay more attention to the stability and transparency of the cryptocurrency market. As the cryptocurrency market continues to mature, it is expected that more regulatory measures will be introduced to ensure the healthy development of the market and the protection of investors.
In conclusion, the surge event of Celsius token is not only a rapid increase in market prices but also a comprehensive test of the operating mechanisms of the cryptocurrency market, investor behavior, platform strategies, and regulatory environment. This event provides valuable experience for cryptocurrency participants, emphasizing the importance of flexible and thoughtful decision-making in the constantly evolving cryptocurrency field.
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