As the price of Bitcoin (BTC) continues to plunge, in line with the bearish trend of the entire cryptocurrency market, the crypto lending firm Celsius Network has been making last-ditch efforts to protect its assets from liquidation.
Indeed, Celsius has been adding more Bitcoin in order to lower the price at which its position is to be liquidated. However, if Bitcoin drops below the current liquidation price of $16,852, Celsius will likely go bankrupt and lose all of its clients’ funds.
As a reminder, Celsius has paused all withdrawals and transfers between accounts on its platform due to “extreme market conditions,” as the company confirmed in a blog post on June 13, adding more pressure on the crypto industry.
The danger of mass liquidation
Celsius selling its position would also mean dropping Bitcoin worth around $522 million in the open market. A sale of such size would spell disaster for Bitcoin prices which are already spiraling downward.
According to a tweet by crypto analyst Lark Davis aka TheCryptoLark on June 14:
“The risk of mass liquidations is one of the biggest dangers right now that could see a very painful flash crash come in for crypto! A few billion in Bitcoin and Ethereum could be market sold into desperately weak markets unless a lot more collateral is posted!”
To prevent this from happening, Celsius has been adding Bitcoin on the DeFi platform MakerDAO over the past few days, adding 2,000 Wrapped Bitcoin (WBTC) on June 14, in addition to more than 4,000 WBTC on June 13 and 1,165 on June 12, to reinforce its position.
At press time, the flagship digital asset is trading at $22,602, which is a drop of 6.51% on the day and a 23.68% decline over the past seven days, according to CoinMarketCap data.
Source: https://finbold.com/celsius-adds-more-collateral-amid-market-sell-off-to-protect-their-bitcoin-from-liquidation/