The surge in CEL prices could be wiped out due to Celsius’ prevailing troubles, including its bankruptcy.

CEL’s price rose nearly 50% as traders assessed its parent Celsius Network’s intention to return some of the blocked funds to its customers.

No CEL-ling printing at the moment
On the daily chart, CEL surged to its intraday high of $1.67 per token on September 2, after a low of $1.15 a day earlier. However, the token’s strong rally has been accompanied by a drop in trading volume, indicating a lack of confidence among traders in further upside.

Daily CEL/USD chart. Source: Trade View
CEL’s gain came after Celsius Network filed for bankruptcy, asking its customers with “certain custody and custodial accounts to withdraw amounts owed to them in digital assets.”

Celsius pulled itself up by taking cryptocurrencies from its customers and offering them delicious returns by placing their deposits in the broader crypto lending market.

But a market downturn this year left a $2.85 billion hole in Celsius’ balance sheet, prompting the company to freeze its customers’ accounts, freezing billions of dollars in over a million accounts. In July, Celsius filed for Chapter 11 bankruptcy.

CEL price risks down 40%
Celsius Network’s willingness to return some of its deposit funds to customers is an encouraging move. However, according to Simon Dixon, CEO of BnkToTheFuture, the amount on offer is small compared to what the company has.

Meanwhile, interest-bearing Celsius accounts, known as earn accounts, held about $4.2 billion worth of crypto assets as of July 10, according to court documents. In other words, the 50% CEL price rally now looks overdone with negative fundamentals still hanging over the Celsius market.

RELATED: Celsius Bankruptcy Proceedings Reveal Difficulty Amid Diminished Hope of Recovery

From a technical point of view, CEL also risks a significant price adjustment in September.

On the four-hour chart, the Celsius token has been drawing a “rising wedge” since late August. This classic pattern usually leads to a bearish price reversal as illustrated in the chart below.

4 hour chart of CEL/USD with a rising wedge breakout. Source: Trade View
Now CEL is testing the upper trendline of the wedge for a pullback to the lower trendline. The recent trendline is near $1.34, a level that has served as solid support in recent trading history. Therefore, a break below $1.34 could increase selling pressure.

A CEL drop below $1.34 will open the door for a breakout of the rising wedge. The lower target of the CEL, as a rule of thumb for technical analysis, should be the minimum equal to the maximum distance between the upper and lower trendline of the wedge measured from the breakout point.

In other words, CEL could fall to $0.87 by the end of September, 40% below the September 2 price.

Source: CoinTelegraph