Celsius destroys 94% of tokens, what is the reason behind the $CEL surge in just one week?

In the cryptocurrency market, Celsius Network's platform token $CEL has recently experienced a remarkable surge. Data shows that as of May 6, $CEL's increase in the past 24 hours reached an astonishing 91.85%, far exceeding other cryptocurrencies. This significant price fluctuation has sparked widespread attention and discussion within the community.
The direct trigger for this surge can be traced back to a major action on May 1: during its bankruptcy restructuring process, Celsius Network announced the destruction of nearly all of its platform tokens, totaling 652 million $CEL, which accounts for 94% of the total supply. This large-scale token destruction significantly reduced the market supply of $CEL, decreasing it from hundreds of millions to just 40.55 million.
Following this token destruction, the market performance of $CEL improved significantly, with its market capitalization sharply rising from $5.61 million before the destruction. Trading activity for $CEL continues across multiple major exchanges, such as OKX, Bybit, Bitget, Gate, and MEXC, indicating an increase in both liquidity and market interest. This event not only brought positive attention to Celsius Network but also added a new focal point for discussion in the cryptocurrency space.

Behind the Surge: Celsius Network's Token Destruction and Market Reaction

When understanding the factors behind the price surge of Celsius Network (CEL) tokens, the most critical aspect is the token destruction action taken after its bankruptcy restructuring. In July 2022, Celsius filed for Chapter 11 bankruptcy and proposed a plan called "MiningCo Transaction," which focused on Bitcoin mining to improve the repayment plan for creditors. This strategy was approved by the court at the end of 2023 and officially implemented in early 2024, allowing Celsius to allocate over $3 billion in cryptocurrencies and fiat currencies to creditors.
In September 2023, Celsius submitted a request to destroy all $CEL tokens under its control on the effective date of the restructuring. The specific operation took place on April 30, 2024, when Celsius executed the destruction by sending 652.2 million $CEL tokens to an empty address, which accounted for 94% of the previous total supply, with a market value of approximately $415 million. After this destruction, the circulating supply of $CEL was significantly reduced to about 40.6 million.
The direct result of the destruction was a substantial impact on the market supply and demand situation. The sharp decrease in the total token supply, combined with the market's positive response to Celsius's successful bankruptcy restructuring, collectively drove the price of $CEL to surge. Starting from a low of $0.13, $CEL's price skyrocketed to $0.58 within just one week, achieving a remarkable increase of 291%. The daily increase even reached 90% at one point, with a peak price of $0.5899.
Celsius's strategy also reflects its emphasis on the value of the token financially. In the restructuring plan, Celsius proposed that regardless of how these tokens are ultimately handled, each $CEL token should be assigned a specific value, estimated at $0.25. This valuation became particularly important after the destruction due to the tightening of market supply.

Additionally, it is worth noting that although Celsius could only destroy the tokens it held and emphasized that it could not cancel all $CEL token transactions or stop trading on exchanges, the market's response to its token price was still significant. This market dynamic not only reflects the sensitivity of the cryptocurrency market to major events but also demonstrates investors' quick response to changes in supply and demand.
In summary, Celsius Network's token destruction directly triggered a significant change in market supply and led to a substantial increase in the price of $CEL in a short period. This event not only marks Celsius's strategic adjustment after bankruptcy restructuring but also showcases the cryptocurrency market's high responsiveness to such significant events.

About Celsius Network

Celsius Network is a centralized finance (CeFi) platform co-founded by Alex Mashinsky, Daniel Leon, and Nuke Goldstein in 2017. As an innovative cryptocurrency lending platform, Celsius focuses on providing users with comprehensive banking and financial services to achieve stable returns in the crypto economy.
The platform's core functions include providing users with the ability to take out over-collateralized loans at lower interest rates while earning high interest on deposited crypto assets. Additionally, Celsius offers fiat on-ramp and off-ramp services, as well as a digital wallet for everyday payments. Users primarily conduct various operations through the mobile application developed by Celsius, which supports up to 33 different cryptocurrencies.
Celsius's business model is based on attracting user deposits and earning high-interest returns while lending these deposits to institutional clients for profit. This model achieved great success in the early stages of the platform but also exposed shortcomings in risk management. In July 2022, due to a severe financial crisis, Celsius had to file for bankruptcy protection.
In Celsius's ecosystem, the $CEL token plays a crucial role. This native token is not only used to enhance deposit yields and obtain loan interest discounts but also qualifies holders for various loyalty tiers, allowing them to enjoy additional benefits. The platform claims that it allocates 80% of its revenue to provide users with high-interest returns and low borrowing costs, thereby maximizing user benefits.
In addition to lending and deposit services, Celsius has also ventured into Bitcoin mining, further diversifying its revenue sources. Nevertheless, with the volatility of the cryptocurrency market and changes in the economic environment, Celsius has faced increasing challenges, ultimately leading to its bankruptcy restructuring. After undergoing a series of legal and financial reorganizations, Celsius is currently seeking to regain market trust and support through strategic adjustments.
Overall, Celsius Network has experienced a journey from its initial glory to subsequent bankruptcy challenges, reflecting the dynamism and uncertainty of the cryptocurrency market while also showcasing the potential influence and risks of CeFi platforms in the modern financial ecosystem.

Conclusion: Reflections and Impacts of the Celsius Token Surge Event

The surge event of Celsius Network's token is not only a market phenomenon but also a vivid display of the coexistence of risks and opportunities in the cryptocurrency field. This event highlights several key dynamics in the cryptocurrency market while providing important insights for investors and platform operators.
First, the significant rise of Celsius's token $CEL demonstrates the direct impact of supply and demand relationships on the cryptocurrency market. By destroying a large portion of the circulating tokens, Celsius significantly reduced the supply of $CEL in the market, which in turn drove the token price to surge sharply in a short time. Although this strategy was effective, it also sparked discussions about market manipulation and transparency, underscoring the need to maintain fairness and transparency when initiating major events in the cryptocurrency market.
Second, the price surge of the $CEL token reflects the market's optimistic expectations regarding Celsius's successful restructuring and future potential. This shift in sentiment serves as an indicator of investor confidence, suggesting that even after experiencing significant financial and legal difficulties, cryptocurrency enterprises can still regain market support through strategic adjustments.
Additionally, this event serves as a reminder of the risks investors face when making decisions in a dynamic and sometimes opaque market. While significant short-term gains may be possible, such high volatility can also bring corresponding risks, especially in the absence of sufficient market information.
Finally, the surge of Celsius tokens should prompt regulators to pay more attention to the stability and transparency issues in the cryptocurrency market. As the cryptocurrency market continues to mature, it is expected that more regulatory measures will be introduced to ensure healthy market development and investor protection.
In summary, the surge event of Celsius tokens is not only a rapid increase in market prices but also a comprehensive test of the operational mechanisms of the cryptocurrency market, investor behavior, platform strategies, and regulatory environments. This event provides valuable experiences for cryptocurrency participants, emphasizing the importance of flexible responses and thoughtful decision-making in the ever-evolving field of cryptocurrency.