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

Legendary share market investing expert and owner of Berkshire Hathaway Warren Buffett
International Stock News

Warren Buffett's $347 billion warning to Wall Street is ringing out loud and clear. History says this happens next.

Let's take a look.

Read more »

Warren Buffet
International Stock News

Warren Buffett nearly made his biggest investment since 2022. Here's what's holding him back.

Buffett said Berkshire came close to spending $10 billion, and he'd happily spend $100 billion.

Read more »

Happy man working on his laptop.
International Stock News

Here's why Amazon is a brilliant buy now (Hint: It's not e-commerce)

Fortunately for investors, cloud computing is going through a massive boom.

Read more »

A man looking at his laptop and thinking.
International Stock News

With Warren Buffett stepping down as CEO, will Berkshire Hathaway sell Apple stock?

Or will it find something else to invest in? Let's take a look.

Read more »

Man on his laptop standing next to data centres.
International Stock News

History says now is the time to buy Nvidia stock

History doesn't normally repeat itself, but it often rhymes.

Read more »

Woman relaxing and using her Apple device
International Stock News

16 words from Warren Buffett that should have Apple stock investors excited

Let's see what Buffett had to say and what it means for investors.

Read more »

Legendary share market investing expert and owner of Berkshire Hathaway Warren Buffett
International Stock News

Prediction: Warren Buffett may be shifting out of his Berkshire Hathaway CEO role, but he's not done investing

Let's take a closer look at what may be ahead.

Read more »

A woman sits in a cafe wearing a polka dotted shirt and holding a latte in one hand while reading something on a laptop that is sitting on the table in front of her
International Stock News

Here's why I'm not too worried for Alphabet despite Apple's potential new AI-powered Safari search

Investors panicked when the possibility was floated, but take a step back and look at the bigger picture.

Read more »