As part of its reorganisation strategy, insolvent crypto lending platform Celsius has recently received the green light from the court to swap over its altcoin holdings into Bitcoin and Ethereum. The move comes as Celsius aims to reorganize its assets and navigate its financial challenges. According to reports, the now-defunct platform has transferred sizeable amounts of its holdings to stablecoin issuer Paxos and market maker Wintermute in an effort to increase liquidity.
According to Data from analytics firm Kaiko, the value of Celsius’ altcoin portfolio, consisting of both liquid and illiquid assets and its own CEL currency, has experienced sharp decreases. Since the opening of the institutional exchange EDX in June, Bitcoin Cash (BCH) and Litecoin (LTC) have seen increases. Still, most of Celsius’ other assets have seen reductions ranging from -84% to -6%. The only asset that has lost more value than CEL, which made up a sizeable chunk of Celsius’ altcoin holdings, is SRM, down 84% from the previous year. CEL has fallen by 83%.
The cryptocurrency liquidity surrounding Celsius raises questions about future market effects, according to Kaiko’s analysis. Liquidity for these tokens has decreased over the past year, with overall market depth falling by 40% since 2022 and amounting to about $90 million in early July. However, according to court filings, Celsius possesses altcoins with a value much above this one, making it difficult to liquidate without suffering a significant price drop.
According to Kaiko, “More than 60% of altcoin market depth is concentrated on Binance and other off-shore exchanges while 30% is on U.S. exchanges.”
As Celsius continues to liquidate altcoins, the larger altcoin market braces for probable short-term effects. The industry keeps a careful eye on these developments because it knows that a large player like Celsius can have a big impact on the market as a whole.
“There is virtually no liquidity for CEL as measured by market depth, which has collapsed to just $30k, concentrated mostly on OKX and Bybit.” Kaiko’s report states.
Since a sizable percentage of the altcoin market depth is focused on foreign exchanges, the market may be under pressure due to Celsius’ continued liquidations. The effect of a significant company like Celsius on the market continues to be a subject of curiosity as industry experts keenly monitor these developments.
Meanwhile, Celsius has accused StakeHound in a court filing of failing to return various tokens valued at $150 million that were entrusted to the liquid staking platform.
The filing includes a claim of contract breach and “wilful misconduct”. The tokens in question are valued at $300,000 in Polkadot (DOT) tokens, $120,000 in Ethereum (ETH), and $30,000,000 in Polygon (MATIC). In the ongoing bankruptcy procedures, Celsius requests the return of its property and monetary damages, legal costs, and attorneys’ fees.