Why Ethereum and Solana were trading wildly today

Today, we learned more about Celsius Network's balance sheet problems.

| More on:
A woman pulls devil rock'n'roll hands and sticks her tongue out whilst headbanging, she's rocking it.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened 

The crypto market went on a wild trajectory over the past 24 hours, shooting higher late in the day on Sunday only to crash again on Monday morning. At the end of the day, values are down almost across the board. 

Celsius Network (CRYPTO: CEL) was the wildest mover today, trading as high as $4.46 and as low as $2.70. That's a gain of 65% from the low or a loss of 39% from the high, depending on what your reference point is. Ethereum (CRYPTO: ETH) didn't swing quite as much but is down 5.7% from its high, and Solana (CRYPTO: SOL) is down 7.1% from today's peak. 

So what 

The biggest news item of the day was a Celsius Network filing with a bankruptcy court that showed $6.6 billion in net liabilities compared with $3.8 billion of assets. There's a $2.85 billion gap in funding, and on top of it there were 100,669 Bitcoin deposited by investors and only 37,926 Bitcoin remains. 

There's been a short squeeze in Celsius Network tokens since the company filed for bankruptcy protection, but this was more concrete news today. A massive hole in the balance sheet won't be filled without new capital, and that seems like a stretch. 

Reports over the past few days have indicated that Celsius Network is for sale, but in bankruptcy the courts and creditors hold all of the cards. It's not clear who would want to buy the company or what value they would get after paying back some of customers' frozen funds.

Ethereum and Solana are riding the Celsius wave today, it seems, with very little news out of either ecosystem. Ethereum continues to move slowly toward The Merge and investors have bid that cryptocurrency up sharply in anticipation. Solana's network continues to be upgraded slowly, but activity has slowed like with most blockchains over the past few months. 

Now what 

The black cloud over crypto the past two months has been the insolvency of some of the biggest asset owners, like Three Arrows Capital and Celsius Network. They had immense leverage in the system, and that led to a collapse that still hasn't fully played out yet. 

What we've learned today is more about the scale of the problem. Rumors have been circulating that Celsius Network indeed had a $2 billion to $3 billion hole in the balance sheet, and that appears to be the case after all. 

I'm not sure why markets surged after the Celsius report came out, but they're trading lower today, and I think that's natural. It'll likely be months before creditors and investors find out what's left to be divvied up, but it seems the entire market is taking a cautious approach until we learn more. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Travis Hoium has positions in Ethereum and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Ethereum and Solana. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on International Stock News

Happy woman on her phone while her electric vehicle charges.
International Stock News

Is Tesla the best EV stock for you?

Tesla stands out as the premier EV maker, but it might not be right for every investor.

Read more »

A woman sits on sofa pondering a question.
International Stock News

After Nvidia's 10-for-1 stock split, is it still a buy?

Nvidia shares saw a bump after their recent split.

Read more »

Investor looking at falling ASX share price on computer screen
International Stock News

Nvidia stock drops 6.5%, dragging artificial intelligence stocks lower

Is the AI bubble bursting?

Read more »

A cool young man walking in a laneway holding a takeaway coffee in one hand and his phone in the other reacts with surprise as he reads the latest news on his mobile phone
International Stock News

Thinking about buying Nvidia stock? Here's why you might already own it

You might not have missed out on Nvidia's gains after all.

Read more »

Man smiling at a laptop because of a rising share price.
International Stock News

Nvidia investors just got some bullish news

The GPU leader has opportunities for robust growth beyond the artificial intelligence market.

Read more »

A beautiful ocean vista is shown with a woman whose back is to the camera holding her arms up in triumph as she stands at the top of a rock feeling thrilled that ASX 200 shares are reaching multi-year high prices today
International Stock News

Is Nvidia stock going to $200 in the wake of its 10-for-1 stock split?

Wall Street analysts are boosting their price targets in the wake of Nvidia's high-profile stock split.

Read more »

A boy with a gold crown stands stoically looking straight ahead.
International Stock News

Can anyone topple Nvidia as the king of artificial intelligence investments?

There are many comparisons, but nearly all fall short.

Read more »

A woman stands triumphant with arms outstretched as she overlooks a city at sunset.
International Stock News

Nvidia shares reach world's most valuable milestone. Where to now?

Nvidia beats out Apple and Microsoft to be number one in the world.

Read more »