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Celsius, a notable player in the cryptocurrency lending and borrowing sector, has recently publicized its decision to liquidate its customers' altcoin holdings. The divestment will commence on July 1, sparing only Custody and Withhold accounts. This development is particularly significant given that Cardano (ADA), Polygon (MATIC) and Solana (SOL) constitute the largest portion of the platform's altcoin reserves.
Cardano has been hailed as a transformative force within the blockchain realm. However, the announcement arrives on the back of a disappointing price performance by ADA and SOL, both having experienced an approximately 30% devaluation in recent days.
Celsius will be selling all altcoins from all customers (except Custody and Withhold accounts) starting July 1st and will be converting them into Bitcoin and Ethereum.
— Celsians (@CelsiansNetwork) June 15, 2023
The decision has provoked a wave of discontent within the cryptocurrency community, with critics accusing Celsius of potential market manipulation and a failure to uphold its fiduciary duties. The primary concern is that other market participants might capitalize on this publicized sell-off by "front-running" — selling these coins before Celsius can execute its planned liquidations, thus triggering a further decline in prices.
The potential ramifications of Celsius' divestment are substantial. Large-scale liquidations can exert significant downward pressure on the prices of the targeted altcoins. This development could, in turn, trigger a cascade effect, compelling altcoin holders across various platforms to sell their assets in anticipation of further depreciation.
Conversely, for investors with a bullish long-term outlook on these altcoins, the sell-off might present a compelling buying opportunity. As prices decrease, the potential for future returns grows proportionally for investors with the fortitude to buy these assets at a discount.
The forthcoming divestment by Celsius is poised to have immediate and consequential impacts on the altcoin market. Whether these impacts will translate into further price devaluation or an attractive buying opportunity remains uncertain.
Valeria Blokhina
Gamza Khanzadaev
Yuri Molchan
