The crypto lender Nexo sent an official letter of intent to Celsius today, offering to buy some or all of its collateralized loan assets to secure sufficient liquidity for its...
Nexo platform could rescue Celsius' customers after “what appears to be the insolvency of the Celsius Network.”
There’s a glimmer of hope for the bear market’s most recent victim. Following reports that Celsius is insolvent, Nexo is offering a buy-out.
A Nexo representative told Cointelegraph that Nexo is trying to do the “right thing” as they are “mindful of the repercussions for retail investors & the crypto community.”
Celsius suspended all network withdrawals on Monday; users are not able to access their funds. In an open letter, Nexo has extended a formal offer to acquire qualifying assets of Celsius Network after their withdrawal freeze. The letter states:
“Nexo, its partners, and affiliates could readily acquire from Celsius part or all qualifying, outstanding collateralized loan receivables secured by their corresponding pledged cryptocurrency collateral, subject to Nexo’s risk management and collateral requirements.”
In a nutshell, the Nexo team would absorb all of Celsius’ loans and gain its customer database. The Nexo team has allowed seven days for the Celsius team to respond, as the proposal will terminate on June 20.
In a tumultuous weekend of market action, Nexo’s first call to help was rejected by the Celsius team on June 12:
“Yesterday [June 12] we reached out to the Celsius team to offer our support, but our help was refused.”
Separately, Nexo has reassured investors that funds are safe. The Nexo representative told Cointelegraph it was “the first crypto lender to publicly open its books to the public in real time back in September and invited all our competitors and responsible crypto platforms to follow our lead.”
Competitors including Ledn, a Bitcoin-only (BTC) credit and savings product platform have released similar statements to spread calm among investors. In a tweet, Ledn shared that customers’ investments are secure. BlockFi CEO Zac Prince tweeted that his business is operating normally. Ledn, Nexo and Blockfi have been open to talking about their business models with Cointelegraph previously.
Related: Mashinsky says ‘Sharks of Wall Street’ circling around Celsius and other projects
Nexo is not the only company to come to the aid of Celsius. Bitcoin maximalist Cory Klippsten, founder of Bitcoin-only exchange Swan Bitcoin (who had previously called out Celsius as risky) has offered a “life raft” to Celsius investors.
Hey @celsiusnetwork users, I really hope you get your coins back from @mashinsky. And I also hope you never, EVER trust him again.
— Cory Klippsten (@coryklippsten) June 13, 2022
NO MORE 1 BTC MINIMUM for the @swanbitcoin life raft. Free membership in Swan Private ($3000 value) for the first 1000 Celsius members who DM me.
For some commentators, such as analyst Will Clemente, comparisons between Luna’s implosion and Celsius’ apparent insolvency are too hard to ignore:
I guess Luna and Celsius will be our two sacrifices to the crypto gods for this bear market?
— Will Clemente (@WClementeIII) June 13, 2022
As Klippsten and Nexo have made clear, the crypto community is attempting to limit the immediate fallout of Celsius' reported insolvency. The Nexo spokesperson said "[Nexo] hopes Celsius will accept this help and as few investors will be affected adversely as possible."
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Futures data and decreased demand for Tether signal that the crypto market is set for another round of pain.
The total crypto market capitalization has been holding a slightly ascending trend for the past 3 months and the $1.75 trillion support was most recently tested on April 27 as Bitcoin (BTC) bounced at $38,000 and Ether (ETH) at $2,800 on April 27.
The crypto market’s aggregate capitalization showed a 3.5% decrease in the last 7 days and notable losers were a 18.8% loss from XRP, a 10.2% loss from Cardano (ADA), and 9.7% drop in Polkadot (DOT) price.
Analyzing a broader range of altcoins provides a more balanced picture, that includes 25% gains from some gaming and Metaverse projects in the same time period.
Apecoin (APE) rallied 44% due to the upcoming Otherside metaverse land auction scheduled for April 30. The Otherside is being developed by Yuga Labs, Animoca Brands and the Bored Ape Yacht Club NFT team and NFT investors have high expectations for the project.
The native tokens of move-to-earn lifestyle app STEPN (GMT) rallied 28% after the U.S.-based crypto exchange Coinbase announced plans to list the token.
Nexo gained 15% after crypto and derivatives exchange Binance announced its listing on April 29 and Nexo also revealed plans to issue a credit card that accepts crypto as collateral rather than selling the holders’ assets.
Zilliqa (ZIL) price has been adjusting after the token pumped 380% in late March and this follows the project’s March 25 announcement of a metaverse service that will utilize Nvidia technology.
Meanwhile, data from DappRadar shows that play-to-earn unicorn, Axie Infinity (AXS) plunged to its lowest level in 9 months after the number of users and transactions declined by 15% over the last 30.
The OKX Tether (USDT) premium gauges China-based retail demand and it measures the difference between the China-based peer-to-peer trades and the United States dollar.
Excessive buying demand puts the indicator above fair value at 100%. On the other hand, Tether’s market offer is flooded during bearish markets, causing a 4% or higher discount.
The OKX Tether premium peaked at 2% on April 28, its highest level in 2022. The movement coincided with Bitcoin breaking above $40,000, but its price reverted later that day. Currently, the Tether premium stands at 0%, signaling a neutral sentiment from retail traders.
Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.
A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.
As shown above, the accumulated seven-day funding rate is slightly positive for Bitcoin and Ether. Data indicates slightly higher demand from longs (buyers), but nothing that would force traders to close their positions. For instance, Luna’s positive 0.15% weekly rate equals 0.6% per month, which should not concern most futures traders.
The absence of the Tether premium in Asia and the flattish perpetual contract premiums signal a lack of demand from retail traders right as the total crypto market capitalization struggles to sustain the $1.75 trillion support.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
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