Celsius Just Dipped By 32% Due To Ripple Effects After Terra Collapse.
Terra’s woes appear to affect other crypto projects in the industry. Apparently, Celsius, which is the native token on the Celsius Network, has experienced a 32% price drop due to fears that it might undergo what Terra underwent a few weeks ago.
At the time of this writing, data on CoinMarketCap indicate a 32% price decrease for Celsius (CEL). The coin is currently trading at around $0.44.
Unrealistic Rewards
The fear is primarily fueled by the high rewards promised by the Celsius network, raising questions about the sustainability of the system. Celsius promises as high as 30% weekly returns on investments. While this may have contributed to investor pessimism, it’s still not clear what exactly led to the sudden price drop of the CEL token. Such price movements are often caused by sudden whale action or general market changes in the wider crypto industry.
Investors’ Appetite For High-Yielding Protocols Has Decreased
Since the Terra ecosystem collapsed in May, investors have largely avoided crypto projects promising extremely high rewards. Before its collapse, Terra was dishing out 20% ROI to those who invested in UST. These rewards are often pointed out as one of the factors that caused Terra’s downfall. This is why investors may be wary of the 30% rewards promised by Celsius.
“We Are Undoubtedly In A Crypto Winter”
However, the company (Celsius Network Ltd) was quick to note that it took measures early enough to prevent an adverse circumstance such as what befell Terra. It also noted that Celcius isn’t the only crypto being affected by the current crypto winter.
Its press statement read,
“Looking across the entire crypto sector, we are undoubtedly in a crypto winter. The price of all cryptocurrencies have clearly been affected by a general market downturn. We are squarely focused on building for the long-term.”