The price of bitcoin has made a remarkable recovery above $20,000 after a brutal week riddled with crashes. These dips had driven decentralized finance (DeF)/ lending protocol Celsius, to the brink of liquidation. However, as the price has recovered, the platform is once again able to hold out for longer as its liquidation point is now a bit further away. The question remains if the recovery will hold and if Celsius will be able to avoid liquidation.
With the price of bitcoin above $20,000, the liquidation price of Celsius is now a little bit distant. This has not changed the sentiment around the lending protocol though, which has now suspended withdrawals for 7 days at this point. Its liquidation price still remains firmly at $14,000 but the company has assured the community that it continues to work to rectify the issues.
Celsius had first announced the transfer and withdrawal freeze last Monday citing unstable market conditions as the reason behind the move. Even with the recent recovery, the lending protocol remains at risk of liquidation, and as such withdrawals and transfers remain frozen.
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In its most recent communique with the public, Celsius has said that it is working with officials to find a suitable resolution to its issues. “As has been a priority since our company’s inception, we maintain an open dialogue with regulators and officials,” said Celsius. “We plan to continue working with regulators and officials regarding this pause and our company’s determination to find a resolution.”
However, if history is anything to go by, then it is very unlikely that investors will be able to withdraw their funds. Speculations in the space remain largely in the camp of eventual bankruptcy especially given the Three Arrows Capital (3AC) debacle.
The current trajectory for bitcoin points towards more recovery to come but that it is only if this turns out to be a legitimate recovery and not a bull trap. This would essentially see the price test the $21,000 resistance level before the end of the trading day.
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That said, the digital asset price is still trading below its 20-day moving average. While this can often point toward a buying opportunity, it can also show that investors are not willing to put money into the market at the prices they have over the last two weeks.
Market sentiment is also in extreme fear, pointing to even more wariness among investors. If the sentiment were to turn along with prices, then the market could see more buying pressure, which could see the uptrend continue.
Bitcoin is trading at $20,731 at the time of this writing. It remains the world’s largest cryptocurrency with a market cap of $396 billion.
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