Celsius, the troubled crypto lender, was seen adding additional Bitcoin to DeFi platform MakerDAO in order to reduce the price at which its position will be liquidated.
If Bitcoin prices hit $16,852, the institution’s $522 million positions will be liquidated, according to on-chain statistics. The company recently froze withdrawals due to a severe liquidity shortage.
Bitcoin is presently trading just under $22,000, but it is under significant downward pressure.
If Celsius is liquidated, it will be obliged to sell its Bitcoin holdings, which will result in a $522 million loss on the open market. A large-scale sale like this would be disastrous for Bitcoin prices.
To avoid this, the lender has been steadily increasing its Bitcoin holdings over the last 24 hours. To date, it has added roughly 3000 Wrapped Bitcoin (the DeFi counterpart of the token) to bolster its position.
However, Celsius’s position is conditional on Bitcoin’s price continuing above the liquidation price. If the threshold is breached, the lender will most likely risk bankruptcy and the loss of all customer funds.
A liquidation might also cause Bitcoin to plummet below $10,000.
Celsius isn’t the only one with a problem. Microstrategy, which used Bitcoin to buy more tokens, could suffer a $1 billion loss if Bitcoin values continue to fall.