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Celsius’s plans for liquidation following bankruptcy may impact the broader cryptocurrency market, according to Kaiko.
The strategy of bankrupt lender Celsius to convert its altcoins into Bitcoin (BTC) and Ethereum (ETH) may increase pressure on the cryptocurrency market, as indicated by a report from blockchain analytics firm Kaiko dated July 10.
Kaiko observed that the majority of altcoins owned by Celsius have experienced substantial declines in liquidity, with reductions ranging from 6% to as much as 84% over the past year.
“The overall market depth for Celsius’ altcoin assets has decreased by 40% since 2022, amounting to approximately $90 million in early July.”
As illustrated in the chart below, only Litecoin (LTC), Bitcoin Cash (BCH), Polygon (MATIC), and Aave (AAVE) exhibited notable changes in their liquidity conditions over the last year, while most others saw a decline.
Source: Kaiko
BCH and LTC, in particular, experienced an increase in their liquidity after EDX, a cryptocurrency exchange supported by traditional financial entities, began offering support in June.
The crypto firm further highlighted that Celsius’s total altcoin holdings surpassed $90 million, indicating that liquidating these assets could result in significant price slippage. It added:
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“Over 60% of altcoin market depth is concentrated on Binance and other offshore exchanges, while 30% resides on U.S. exchanges.”
CEL token liquidity is nearly non-existent
According to Kaiko, Celsius is confronted with a challenge as there is nearly no liquidity for its primary altcoin holding, CEL.
CEL is the native token of Celsius, representing almost 65% of the bankrupt company’s total altcoin assets.
“Liquidity for CEL is virtually non-existent as indicated by market depth, which has plummeted to just $30,000, primarily concentrated on OKX and Bybit.”
Source: Kaiko
Since Celsius’s bankruptcy filing, interest in the lender’s native token has diminished, with its price falling below $1 after reaching over $8 in 2021, according to data from CryptoSlate.
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