About a year ago, crypto lending platform Celsius went under and most of the clients of the battered platform are still unable to withdraw (part of) their crypto. Celsius is testing the patience of all customers and is still in a drawn-out restructuring procedure. On May 25, news broke that Fahrenheit was allowed to take over Celsius’ assets. On June 15, the cryptocurrency lender submitted its reorganization plan that shows it wants to convert all altcoins to bitcoin (BTC) and ethereum (ETH).
Which coins will experience the greatest selling pressure and what will be the effect on prices?
Celsius converts altcoins to BTC and ETH
However, Celsius first needs permission from the bankruptcy court before it can actually sell its altcoins. Moreover, it only applies to the crypto coins that customers earned a return on.
If the plan is approved, Celsius will begin converting the altcoins to bitcoin and ethereum on July 1.
According to the filing, the conversion will not affect the ultimate claims of all creditors. The decision is intended to preserve customer value amid the current regulatory uncertainties.
Fahrenheit is a crypto consortium consisting of blockchain-based venture capital firm Arrington Capital and miner US Bitcoin Corp. According to the deal it managed to make with the bankrupt platform, the new company will receive a significant amount of liquid crypto, estimated at between $450 million and $500 million. US Bitcoin Corp will also build bitcoin mining facilities.
Which crypto are being sold?
Celsius submits a monthly report detailing all of the funds held by the company. This shows that cel token (CEL), polygon (MATIC), cardano (ADA), chainlink (LINK) and litecoin (LTC) are the largest holdings.
Impact on prices and selling pressure
Celsius announced that it will sell all altcoins from its customers starting on July 1st and convert them into bitcoin (BTC) and ethereum (ETH). The total altcoin sell pressure amounts to $215 million, with the following breakdown:
- CEL: $70 million
- MATIC: $52 million
- ADA: $26 million
- LINK: $17 million
- LTC: $14 million
The total selling pressure of all altcoins together is equivalent to $215 million. Nevertheless, the impact will be moderated by how the total selling pressure is distributed across all 15 altcoins.
However, altcoins have been having a pretty rough time lately as a result of the US Securities and Exchange Commission labeling that one hefty list as an effect.
The conversion of altcoins to bitcoin and ethereum by Celsius will have significant implications for the crypto market. While the total selling pressure is substantial, the distribution across multiple altcoins will help moderate its impact on prices. The decision to convert altcoins is aimed at preserving customer value and navigating the current regulatory uncertainties. Only time will tell how the market reacts to this restructuring plan and whether it brings any relief to Celsius’ clients.