The embattled crypto lender’s CEL token reached $1.56 on Tuesday as holders tried orchestrating a short squeeze.
- A surge in retail buying and short covering caused Celsius’ CEL token to jump 65% over the past 24 hours – but fell sharply again after.
- The hashtag #CELShortSqueeze, helped the short squeeze plan to become more visible, helping to fuel the rally.
- A similar method was used by GameStop (NYSE:GME) and AMC Theatre to squeeze short-sellers in January 2021.
Celsius Network’s native token, CEL, had almost quadrupled in price since June 19. Day traders appear to be fueling a short squeeze frenzy.
Short squeeze
The price of CEL increased from $0.67 on June 19 to $1.59 on June 21, a 180% spike compared to the crypto market’s 12.37% increase during the same period.
Interestingly, the rally started after PlanC, an independent market analyst, announced a $20 million bounty for those who could prove that the Celsius Network was attacked by a third party, which led the crypto lending firm to suspend withdrawals last week.
There was an immediate frenzy on Twitter following the announcement, with many accounts including the hashtag #CelShortSqueeze in their bios and thus indicating that they intended to target investors who had bet against CEL.
On Twitter, the hashtag was trending in the United States. According to Google Trends, internet searches for the keyword, “CEL short squeeze” also reached a perfect score of 100 between June 12 and July 18.
By using the hashtag #CELShortSqueeze on Twitter, Celsius holders hoped to force a short squeeze by purchasing CEL on FTX crypto exchanges, moving it to decentralised exchanges (DEXs), and placing sell limit orders (sell limit orders are only triggered at a certain price).
GameStop
Day traders used this strategy during the GameStop short squeeze in January 2021, which drove the price of GameStop’s stock (GME) up over 1,000% in two weeks.
On that occasion, hedge funds with a short position on GME suffered heavy losses, New York Stock Exchange trading of GME was suspended, and trading app Robinhood stopped customers from purchasing GME (seeking to meet their demand for refunds from disgruntled customers).