- Weeks after the SEC’s allegations, Cardano and the crypto market have displayed signs of recovery.
- Now-bankrupt crypto lender Celsius plans to shake up the market with its reorganization proposal.
- Celsius plans to sell its ADA tokens, and users are growing concerned.
In the wake of TradFi’s newfound interest in the crypto industry, the market is showing signs of recovery. Leading tokens like Bitcoin, Ethereum, and Cardano have all reclaimed crucial levels. However, amidst this positive momentum, now-bankrupt crypto lender Celsius wants to drop a bombshell that could send tremors through the industry.
The defunct crypto lender has proposed to sell its users’ altcoin holdings, including Cardano’s ADA and Polygon’s MATIC, for bitcoin (BTC) and ether (ETH). As news of this impending chaotic liquidation event spreads, users’ concerns are growing, fearing the impact it could have on the market.
Fear and Uncertainty
On June 15, Celsius announced that it would sell its customer’s altcoins valued at $215 million, excluding custody and withhold accounts, starting July 1st. As part of its controversial reorganization plan, the crypto lender shared that it will convert its users’ holdings into bitcoin (BTC) and ether (ETH)
Celsius’ proposal currently awaits approval from the bankruptcy court. If approved, this move could shake up the market, as the court’s decision, set to be announced on June 28, will determine the fate of the $215 million users’ funds.
About $26 million worth of Cardano’s ADA tokens is slated for Celsius’ sell-off. As all eyes turn on the now-defunct crypto lender’s plan, users worry about their investments’ future, questioning how the market would react to the pressure imposed by the sell-off.
It’s worth noting that Cardano recently faced scrutiny from the SEC, which alleged the token of being an unregistered security on June 6. This led to mounting sell pressure on Cardano (ADA), plunging the token by over 40%, recording a year-to-date low of $0.22. With leading TradFi institutions showing interest in the crypto industry, Cardano has managed to regain momentum to surge by over 30% reaching $0.3 and recovering some of its incurred losses.
Still, many Cardano enthusiasts remain apprehensive, fearing another leg down in light of Celsius’ forthcoming liquidation plan.
Given investors’ heightened uncertainty and fear, Chris O, a prominent Cardano influencer, has stepped forward to shed light on the situation, dismissing the notion that Celsius’ liquidation event should be a cause for alarm. The Cardano OG argued that Celsius’ sell-off plan is just spreading FUD and, ultimately, is a losing strategy.
To provide clarity, Chris clarified that not all ADA held on Celsius will be converted. Instead, the bankrupt crypto lender plans to sell its ADA tokens gradually over several days and weeks to minimize potential slippage. In addition, the influencer pointed out that Cardano (ADA) boasts a daily trading volume of over $300 million, and a $26 million sale will have little to no impact on the price.
At press time, Cardano’s (ADA) price stood at $0.293, with a market cap exceeding $10 billion and a daily trading volume of $200 million, according to CoinMarketCap data.
On the Flipside
- Cardano Founder Charles Hoskinson has hinted at a Cardano Summer this year.
- Cardano’s ADA is still 21% down from its June peak of $0.381 and has yet to recover from the SEC’s accusations.
- Charles Hoskinson claimed SEC’s action against ADA was motivated by a hidden agenda of implementing CBDCs.
Why This Matters
Recent developments suggest that Cardano could break out of its range and target the $0.4-0.5 price range. However, Celsius’ sell-off plan could impede its trajectory and spark unwarranted sell-pressure on the token.
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