What is Celsius?
Celsius claims to be a regulated lending platform that acts as a peer-to-peer (P2P) lending platform. It offers interest on deposited cryptos for lenders while offering loans to borrowers. The company boasted a nearly 10% APY for lenders willing to deposit stablecoins such as Tether and GUSD.
In order to further monetize this system, Celsius created the CEL token. The token was used to take loans, make payments and more. If lenders cashed out their interest in CEL, they would receive a bonus.
A Pyramid Scheme?
The old saying of “if it sounds too good to be true, it probably is” applies heavily to Celsius. P2P platforms in general have a history of failing or not adopting mass users. Adding a crypto aspect on top of this is asking for trouble.
With banks offering an interest rate of less than 1%, how could Celsius offer stablecoin lenders an interest rate of at least 10x that? All while offering borrowers an APY “starting at 0.1%”. The simple answer is that such a company is tough to maintain, and in the current bear market, the cracks are starting to show.
Celsius in the Bear Market
With the price of BTC and other cryptos crashing rapidly in the first half of 2022, Celsius ran into a liquidity crunch. As such, starting on June 12, 2022, Celsius announced the freeze to all withdrawals, swaps and transfers between accounts. Three weeks later and not much has changed, with the Celsius website displaying a freeze notification when loading the website.
The problems for Celsius have not stopped there. On July 4th, 2022, Celsius announced they are cutting 150 jobs and restructuring their current company. That is a massive cut for a company that had bragged in 2021 that their team had grown 350% to 150 employees.
With the bear market and overall negative sentiment regarding Celsius, one would expect the price of CEL to fall rapidly. After all, a withdrawal freeze has been the prelude to multiple crypto exchange failures, including MTGOX. Yet, the price of CEL has been almost unaffected by the negative news in the past month.
On June 10th, before the official news of the withdrawal freeze, the price of Celsius was around $0.50. Yet after continued bad news, the price has more than doubled to $1.05.
Is CEL Currently At a Good Price?
The short answer is no, Celsius offers a limited return on a company that is rapidly shrinking and facing insolvency issues. It is still among the top 100-120 coins by market cap, where there are better companies which are not facing the same issue as Celsius.