Over the past 3 days, Celsius (CRYPTO: CEL) has added over 7000 Wrapped Bitcoin (CRYPTO: WBTC) to avoid the risk of mass liquidation.
What Happened: Given the extreme plunge in the crypto market over the past week, major cryptocurrencies, such as Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH) and others are down over 70% from their all-time highs. As prices continue to plummet, major crypto firms face the risk of large-sized positions being liquidated.
The Celsius Network, in effort to prevent liquidation, has added at least 7,206 WBTC to its position, between June 12 and June 14, to further reduce its liquidation price.
According to on-chain data from DeFi explore, Celsius added 1,165 WTBC on June 12, 4,041 WBTC on June 13, 2,000 WBTC on June 14, and continues to add more.
Why It's Important: Being one of the biggest lending platforms in the cryptocurrency industry, Celsius facilitates large-scale crypto loans and holds major positions in the market. Consequently, if Celsius’s current at-risk position were to be sold, there would be over $500 million worth of Bitcoin dumped in the open market.
In already bearish market climates, such a dump would effectuate a vicious cycle, severely declining the price of an already bleeding BTC. As of June 13, according to Wu Blockchain, if Bitcoin hits $22,584, Celsius’s major position would face liquidation risk.
Thus, in such grim market conditions, Celsius’s decision to systematically add more Bitcoin to their position has, for now, prevented liquidation, protecting a further flash crash to the price of Bitcoin.
Although the crypto lending platform is still not out of the woods, as reports indicate, Celsius faces a complete liquidation if BTC drops to $16,582.
